F&M BANK CORP - FORM 10-Q

Attached files

file	filename
EX-32 - CERTIFICATION - F&M BANK CORP	fmbm_ex32.htm
EX-31.2 - CERTIFICATION - F&M BANK CORP	fmbm_ex312.htm
EX-31.1 - CERTIFICATION - F&M BANK CORP	fmbm_ex311.htm

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, 2016.

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 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)

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		Outstanding at May 12, 2015
Common Stock, par value - $5		3,285,691 shares

F & M BANK CORP.

Index

			Page
Part I Financial Information			3

	Item 1.	Financial Statements	3

		Consolidated Statements of Income – Three Months Ended March 31, 2016 and 2015	3

		Consolidated Statements of Comprehensive Income – Three Months Ended March 31, 2016 and 2015	4

		Consolidated Balance Sheets – March 31, 2016 and December 31, 2015	5

		Consolidated Statements of Cash Flows – Three Months Ended March 31, 2016 and 2015	6

		Consolidated Statements of Changes in Stockholders’ Equity – Three Months Ended March 31, 2016 and 2015	7

		Notes to Consolidated Financial Statements	8

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	36

	Item 4.	Controls and Procedures	36

Part II Other Information			37

	Item 1.	Legal Proceedings	37

	Item 1a.	Risk Factors	37

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	37

	Item 3.	Defaults Upon Senior Securities	37

	Item 4.	Mine Safety Disclosures	37

	Item 5.	Other Information	37

	Item 6.	Exhibits	37

Signatures			38

Certifications

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	2016			2015
Interest and fees on loans held for investment	$	7,185		$	6,772
Interest and fees on loans held for sale		372			191
Interest on federal funds sold and bank deposits		8			5
Interest on debt securities		69			43
Total interest income		7,634			7,011

Interest expense
Interest on demand deposits		119			157
Interest on savings accounts		100			33
Interest on time deposits over $100,000		119			123
Interest on other time deposits		220			241
Total interest on deposits		558			554
Interest on borrowed funds		256			131
Total interest expense		814			685

Net interest income		6,820			6,326

Provision for loan losses		-			300
Net interest income after provision for loan losses		6,820			6,026

Noninterest income
Service charges on deposit accounts		234			226
Insurance and other commissions		100			235
Other operating income		429			323
Income on bank owned life insurance		119			118
Low income housing partnership losses		(183	)		(157	)
Total noninterest income		699			745

Noninterest expense
Salaries		2,083			1,818
Employee benefits		697			624
Occupancy expense		188			178
Equipment expense		184			163
FDIC insurance assessment		113			192
Other		1,467			1,407
Total noninterest expense		4,732			4,382

Income before income taxes		2,787			2,389
Income tax expense		693			492
Consolidated net income – F & M Bank Corp.		2,094			1,897
Net income - Noncontrolling interest income		4			26
Net Income – F & M Bank Corp	$	2,090		$	1,871
Dividends paid on preferred stock		128			128
Net income available to common stockholders	$	1,962		$	1,743

Per share data
Net income – basic	$	.60		$	.53
Net income – diluted		.56			.50
Cash dividends	$	.19		$	.18
Weighted average common shares outstanding – basic		3,285,373			3,292,646
Weighted average common shares outstanding – diluted		3,729,674			3,737,046

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,
	2016			2015
Net Income:
Net Income – F & M Bank Corp	$	2,090		$	1,871
Net Income attributable to noncontrolling interest		4			26
Total Net Income:		2,094			1,897

Unrealized holding gains on available-for-sale securities:		30			24
Tax Expense		(10	)		( 8	)
Unrealized holding gain, net of tax		20			16
Total other comprehensive income		20			16

Comprehensive income	$	2,114		$	1,913

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,
	2016			2015
	(Unaudited)			(Audited)
Assets
Cash and due from banks	$	6,587		$	6,923
Money market funds		1,301			1,596
Cash and cash equivalents		7,888			8,519
Securities:
Held to maturity – fair value of $125 in 2016 and 2015		125			125
Available for sale		13,011			13,047
Other investments		12,752			12,157
Loans held for sale		66,468			57,806
Loans held for investment		556,894			544,053
Less: allowance for loan losses		(8,740	)		(8,781	)
Net loans held for investment		548,154			535,272

Other real estate owned		2,450			2,128
Bank premises and equipment, net		8,234			7,542
Interest receivable		1,714			1,709
Goodwill		2,670			2,670
Bank owned life insurance		13,162			13,046
Deferred tax asset		1,506
Other assets		9,489			11,336
Total assets	$	687,623		$	665,357

Liabilities
Deposits:
Noninterest bearing	$	130,066		$	134,787
Interest bearing:
Demand		81,970			81,492
Money market accounts		26,376			26,968
Savings		95,776			90,383
Time deposits over $100,000		53,902			53,625
All other time deposits		107,612			107,415
Total deposits		495,702			494,670

Short-term borrowings		46,210			24,954
Accrued liabilities		14,298			14,622
Long-term borrowings		47,179			48,161
Total liabilities		603,389			582,407

Stockholders’ Equity

Preferred Stock $5 par value, 400,000 shares authorized, issued and outstanding for March 31, 2016 and December 31, 2015, respectively		9,425			9,425
Common stock, $5 par value, 6,000,000 shares authorized, 3,285,538 and 3,293,909 shares issued and outstanding for March 31, 2016 and December 31, 2015, respectively		16,428			16,427
Additional paid in capital – common stock		11,150			11,149
Retained earnings		49,392			48,056
Noncontrolling interest		499			573
Accumulated other comprehensive loss		(2,660	)		(2,680	)
Total stockholders’ equity		84,234			82,950
Total liabilities and stockholders’ equity	$	687,623		$	665,357

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,
	2016			2015
Cash flows from operating activities
Net income	$	2,090		$	1,871
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation		204			172
Amortization of security premiums, net		38			37
Origination of loans held for sale originated		(14,697	)		(16,849	)
Sale of loans held for sale		15,831			13,306
Provision for loan losses		-			300
Decrease (increase) in interest receivable		(6	)		53
Decrease (increase) in other assets		551			(258	)
Increase in accrued expenses		(614	)		932
Amortization of limited partnership investments		183			157
Income from life insurance investment		(119	)		(118	)
Loss on Other Real Estate Owned		1			232
Net adjustments		1,372			(2,036	)
Net cash provided by (used in) operating activities		3,462			(165	)

Cash flows from investing activities
Purchase of investments available for sale		(2,790	)		(6,324	)
Proceeds from maturity of investments available for sale		2,040			4,045
Net increase in loans held for investment		(9,797	)		(8,308	)
Net increase in loans held for sale participations		(13,329	)		(42,300	)
Proceeds from the sale of other real estate owned		124			279
Purchase of property and equipment		(896	)		(558	)
Net cash used in investing activities		(24,648	)		(53,166	)

Cash flows from financing activities
Net change in demand and savings deposits		559			11,676
Net change in time deposits		474			(19,753	)
Net change in short-term debt		21,256			31,405
Cash dividends paid		(754	)		(593	)
Proceeds from issuance of common stock		33			42
Proceeds from issuance of long-term debt		-			15,000
Repurchase of common stock		(31	)		-
Repayment of long-term debt		(982	)		(125	)
Net cash provided by financing activities		20,555			37,652

Net decrease in Cash and Cash Equivalents		(631	)		(15,679	)
Cash and cash equivalents, beginning of period		8,519			23,203
Cash and cash equivalents, end of period	$	7,888		$	7,524
Supplemental disclosure
Cash paid for:
Interest expense	$	800		$	701
Transfer from loans to other real estate owned		442			-
Noncash exchange of other real estate owned		-			(227	)

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,
	2016			2015

Balance, beginning of period	$	82,950		$	77,798

Comprehensive income
Net income – F & M Bank Corp		2,090			1,871
Net income attributable to noncontrolling interest		4			26
Other comprehensive income		20			16
Total comprehensive income		2,114			1,913

Minority interest capital distributions		(77	)		(18	)
Issuance of common stock		33			42
Repurchase of common stock		(32	)
Dividends paid		(754	)		(593	)
Balance, end of period	$	84,234		$	79,142

See notes to unaudited consolidated financial statements

F & M BANK CORP.

Notes to (unaudited) Consolidated Financial Statements

Note 1. Summary of Significant Accounting Policies

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, 2016 and the results of operations for the quarters ended March 31, 2016 and 2015. The notes included herein should be read in conjunction with the notes to financial statements included in the 2015 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 Held for Investment

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.

Loans Held for Sale

These loans consist of fixed rate loans made through its subsidiary, VBS Mortgage and loans purchased from Northpointe Bank, Grand Rapids, MI.

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. Summary of Significant Accounting Policies, 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.

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 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 share calculation.

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:

	For the quarter ended
	March 31, 2016		March 31, 2015
Earnings available to common stockholders:
Net income	$	2,093,314	$	1,896,220
Minority interest	$	3,763	$	25,669
Preferred stock dividends		127,500		127,500
Net income available to common stockholders	$	1,962,051	$	1,743,051

F & M BANK CORP.

Notes to (unaudited) Consolidated Financial Statements

Note 1. Accounting Principles, continued

Earnings per Share, continued

The following table shows the effect of dilutive preferred stock conversion on the Company's earnings per share for the periods indicated:

	Quarter ended
	3/31/2016								3/31/2015
	Income		Shares			Per Share Amounts			Income		Shares			Per Share Amounts
Basic EPS	$	1,962,051		3,285,274		$	0.60		$	1,743,051		3,292,646		$	0.53
Effect of Dilutive Securities:
Convertible Preferred Stock		127,500		(444,400	)		(0.03	)		127,500		(444,400	)		(0.03	)
Diluted EPS	$	2,089,551		3,729,674		$	0.56		$	1,870,551		3,737,046		$	0.50

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, 2016 and December 31, 2015 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, 2016 and December 31, 2015 are as follows:

	2016				2015
			Market				Market
	Cost		Value		Cost		Value

Securities held to maturity
U. S. Treasury and agency obligations	$	125	$	125	$	125	$	125
Total	$	125	$	125	$	125	$	125

	March 31, 2016
			Unrealized				Market
	Cost		Gains		Losses		Value
Securities available for sale
U. S. Treasuries	$	4,013	$	17	$	-	$	4,030
Government sponsored enterprises		8,059		4		1		8,062
Mortgage-backed securities		769		15		-		784
Marketable equities		135		-		-		135
Total	$	12,976	$	36	$	1	$	13,011

	December 31, 2015
			Unrealized				Market
	Cost		Gains		Losses		Value
Securities available for sale
U. S. Treasuries	$	4,015	$	6	$	-	$	4,021
Government sponsored enterprises		8,081		4		11		8,074
Mortgage-backed securities		811		6		-		817
Marketable equities		135		-		-		135
Total	$	13,042	$	16	$	11	$	13,047

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, 2016, 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	$	125	$	125	$	4,045	$	4,050
Due after one year through five years		-		-		8,027		8,042
Due after five years		-		-		904		919
Total	$	125	$	125	$	12,976	$	13,011

There were no gains and losses on sales of securities in the first quarter of 2016 or 2015. 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, 2016 and December 31, 2015 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, 2016
Government sponsored Enterprises	$	2,000	$	(1	)	$	-	$	-	$	2,000	$	(1	)
Total	$	2,000	$	(1	)	$	-	$	-	$	2,000	$	(1	)

December 31, 2015
Government sponsored Enterprises	$	6,056	$	(11	)	$	-	$	-	$	6,056	$	(11	)
Total	$	6,056	$	(11	)	$	-	$	-	$	6,056	$	(11	)

Other investments, which consist of stock of correspondent banks and investments in low income housing projects, increased since December 31, 2015. This increase is due to FHLB stock purchases during the first quarter.

Note 3. Loans Held for Investment

Loans outstanding at March 31, 2016 and December 31, 2015 are summarized as follows:

	2016		2015
Construction/Land Development	$	74,760	$	69,759
Farmland		13,068		13,378
Real Estate		168,889		166,587
Multi-Family		7,458		7,559
Commercial Real Estate		129,485		128,032
Home Equity – closed end		8,823		9,135
Home Equity – open end		57,783		56,599
Commercial & Industrial – Non-Real Estate		28,720		27,954
Consumer		8,023		8,219
Dealer Finance		57,306		54,086
Credit Cards		2,579		2,745
Total	$	556,894	$	544,053

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
For the three months, March 31, 2016	Recorded		Principal		Related		Recorded		Income
	Investment		Balance		Allowance		Investment		Recognized
Impaired loans without a valuation allowance:
Construction/Land Development	$	1,237	$	1,237	$	-	$	2,789	$	24
Farmland		-		-		-		-		-
Real Estate		787		787		-		863		11
Multi-Family		-		-		-		-		-
Commercial Real Estate		405		405		-		663		2
Home Equity – closed end		-		-		-		-		-
Home Equity – open end		1,582		1,582		-		1,499		35
Commercial & Industrial – Non-Real Estate		178		178		-		183		3
Consumer		17		17		-		11		-
Credit cards		-		-		-		-		-
Dealer Finance		7		7		-		3		1
		4,213		4,213				6,011		76

Impaired loans with a valuation allowance
Construction/Land Development		10,651		10,651		2,186		12,065		53
Farmland		-		-		-		-		-
Real Estate		1,224		1,224		234		758		16
Multi-Family		-		-		-		-		-
Commercial Real Estate		968		968		74		906		14
Home Equity – closed end		-		-		-		-		-
Home Equity – open end		1,408		1,408		587		894		10
Commercial & Industrial – Non-Real Estate		27		27		27		5		-
Consumer		-		-		-		-		-
Credit cards		-		-		-		-		-
Dealer Finance		78		78		22		54		2
		14,356		14,356		3,130		14,682		95

Total impaired loans	$	18,569	$	18,569	$	3,130	$	20,693	$	171

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
For the year ended, December 31, 2015	Recorded		Principal		Related		Recorded		Income
	Investment		Balance		Allowance		Investment		Recognized
Impaired loans without a valuation allowance:
Construction/Land Development	$	1,361	$	1,499	$	-	$	3,622	$	73
Farmland		-		-		-		-		-
Real Estate		1,097		1,097		-		734		58
Multi-Family		-		-		-		-		-
Commercial Real Estate		307		307		-		874		17
Home Equity – closed end		-		-		-		-		-
Home Equity – open end		1,159		1,159		-		1,513		82
Commercial & Industrial – Non-Real Estate		181		181		-		186		10
Consumer		18		18		-		7		-
Credit cards		-		-		-		-		-
Dealer Finance		4		4		-		1		4
		4,127		4,265				6,937		244

Impaired loans with a valuation allowance
Construction/Land Development		11,534		11,534		2,373		12,884		299
Farmland		-		-		-		-		-
Real Estate		324		324		238		699		46
Multi-Family		-		-		-		-		-
Commercial Real Estate		890		890		18		900		15
Home Equity – closed end		-		-		-		-		-
Home Equity – open end		1,414		1,414		269		613		75
Commercial & Industrial – Non-Real Estate		-		-		-		-		-
Consumer		-		-		-		-		-
Credit cards		-		-		-		-		-
Dealer Finance		68		68		17		38		5
		14,230		14,230		2,915		15,134		440

Total impaired loans	$	18,357	$	18,495	$	2,915	$	22,071	$	684

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, 2016 (in thousands)	Beginning Balance		Charge-offs		Recoveries		Provision			Ending Balance		Individually Evaluated for Impairment		Collectively Evaluated for Impairment
Allowance for loan losses:
Construction/Land Development	$	4,442	$	-	$	1	$	(686	)	$	3,757	$	2,186	$	1,571
Farmland		95		-		-		(53	)		42		-		42
Real Estate		806		23		4		354			1,141		234		907
Multi-Family		71		-		-		(43	)		28		-		28
Commercial Real Estate		445		-		13		293			751		74		677
Home Equity – closed end		174		1		-		(35	)		138		-		138
Home Equity – open end		634		1		106		252			991		587		404
Commercial & Industrial – Non-Real Estate		1,055		83		2		(46	)		928		27		901
Consumer		108		10		6		9			113		-		113
Dealer Finance		836		69		27		(19	)		775		22		753
Credit Cards		115		25		12		(26	)		76		-		76
Total	$	8,781	$	212	$	171	$	-		$	8,740	$	3,130	$	5,610

December 31, 2015 (in thousands)	Beginning Balance		Charge-offs		Recoveries		Provision			Ending Balance		Individually Evaluated for Impairment		Collectively Evaluated for Impairment
Allowance for loan losses:
Construction/Land Development	$	4,738	$	156	$	85	$	(225	)	$	4,442	$	2,373	$	2,069
Farmland		-		-		-		95			95		-		95
Real Estate		623		25		37		171			806		238		568
Multi-Family		-		-		-		71			71		-		71
Commercial Real Estate		126		-		65		254			445		18		427
Home Equity – closed end		188		26		6		6			174		-		174
Home Equity – open end		154		51		-		531			634		269		365
Commercial & Industrial – Non-Real Estate		1,211		-		62		(218	)		1,055		-		1,055
Consumer		214		32		32		(106	)		108		-		108
Dealer Finance		1,336		251		24		(273	)		836		17		819
Credit Cards		135		60		46		(6	)		115		-		115
Total	$	8,725	$	601	$	357	$	300		$	8,781	$	2,915	$	5,866

F & M BANK CORP.

Notes to (unaudited) Consolidated Financial Statements

Note 4. Allowance for Loan Losses, continued

March 31, 2016	Loan Receivable		Individually Evaluated for Impairment		Collectively Evaluated for Impairment
Construction/Land Development	$	74,760	$	11,888	$	62,872
Farmland		13,068		-		13,068
Real Estate		168,889		2,011		166,878
Multi-Family		7,458		-		7,458
Commercial Real Estate		129,485		1,373		128,112
Home Equity – closed end		8,823		-		8,823
Home Equity –open end		57,783		2,990		54,793
Commercial & Industrial – Non-Real Estate		28,720		205		28,515
Consumer		8,023		17		8,006
Dealer Finance		57,306		85		57,221
Credit Cards		2,579		-		2,579
Total	$	556,894	$	18,569	$	538,325

Recorded Investment in Loan Receivables (in thousands)

December 31, 2015	Loan Receivable		Individually Evaluated for Impairment		Collectively Evaluated for Impairment
Construction/Land Development	$	69,759	$	12,895	$	56,864
Farmland		13,378		-		13,378
Real Estate		166,587		1,421		165,167
Multi-Family		7,559		-		7,559
Commercial Real Estate		128,032		1,197		126,835
Home Equity – closed end		9,135		-		9,135
Home Equity –open end		56,599		2,573		54,026
Commercial & Industrial – Non-Real Estate		27,954		181		27,773
Consumer		8,219		18		8,201
Dealer Finance		54,086		72		54,013
Credit Cards		2,745		-		2,745
Total	$	544,053	$	18,357	$	525,696

Aging of Past Due Loans Receivable (in thousands) as of March 31, 2016

	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, 2016
Construction/Land Development	$	155	$	94	$	52	$	4,870	$	5,171	$	69,589	$	74,760
Farmland		-		-		-		-		-		13,068		13,068
Real Estate		1,255		453		82		922		2,712		166,177		168,889
Multi-Family		-		-		-		-		-		7,458		7,458
Commercial Real Estate		426		-		138		-		564		128,921		129,485
Home Equity – closed end		21		-		3		-		24		8,799		8,823
Home Equity – open end		682		-		47		39		768		57,015		57,783
Commercial & Industrial – Non- Real Estate		109		8		25		217		359		28,361		28,720
Consumer		38		6		4		-		48		7,975		8,023
Dealer Finance		773		238		238		73		1,322		55,984		57,306
Credit Cards		8		2		-		-		10		2,569		2,579
Total	$	3,467	$	801	$	589	$	6,121	$	10,978	$	545,916	$	556,894

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, 2015

	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, 2015
Construction/Land Development	$	104	$	-	$	-	$	4,688	$	4,792	$	64,967	$	69,759
Farmland		-		-		-		-		-		13,378		13,378
Real Estate		2,684		1,332		272		1,010		5,298		161,289		166,587
Multi-Family		-		-		-		-		-		7,559		7,559
Commercial Real Estate		340		241		-		-		581		127,451		128,032
Home Equity – closed end		41		7		-		-		48		9,087		9,135
Home Equity – open end		918		46		107		40		1,111		55,488		56,599
Commercial & Industrial – Non- Real Estate		114		3		25		109		251		27,703		27,954
Consumer		120		10		-		-		130		8,089		8,219
Dealer Finance		905		183		152		108		1,348		52,738		54,086
Credit Cards		10		13		15		-		38		2,707		2,745
Total	$	5,236	$	1,835	$	571	$	5,955	$	13,597	$	530,456	$	544,053

CREDIT QUALITY INDICATORS (in thousands)

AS OF MARCH 31, 2016

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	$	-	$	432	$	9,285	$	37,023	$	13,096	$	3,237	$	11,687	$	-	$	74,760
Farmland		66		-		2,565		3,558		4,914		1,965		-		-		13,068
Real Estate		-		1,098		58,650		74,904		23,848		8,316		2,073		-		168,889
Multi-Family		-		371		3,880		3,014		193		-		-		-		7,458
Commercial Real Estate		-		2,022		25,072		76,070		21,252		3,714		1,355		-		129,485
Home Equity – closed end		-		-		3,412		3,690		1,615		103		3		-		8,823
Home Equity – open end		-		1,571		14,737		32,797		4,805		385		3,488		-		57,783
Commercial & Industrial (Non-Real Estate)		1,221		214		7,374		16,984		2,616		66		245		-		28,720
Total	$	1,287	$	5,708	$	124,975	$	248,040	$	72,339	$	17,786	$	18,851	$	-	$	488,986

Consumer Credit Exposure

Credit Risk Profile Based on Payment Activity

	Credit Cards		Consumer
Performing	$	2,579	$	65,014
Non performing		-		315
Total	$	2,579	$	65,329

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, 2015

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	$	-	$	485	$	8,410	$	31,783	$	14,260	$	3,216	$	11,605	$	-	$	69,759
Farmland		66		-		2,615		3,768		4,952		1,977		-		-		13,378
Real Estate		-		955		54,400		76,545		23,695		8,334		2,658		-		166,587
Multi-Family		-		391		3,925		3,046		197		-		-		-		7,559
Commercial Real Estate		-		2,087		25,889		74,337		20,271		4,149		1,299		-		128,032
Home Equity – closed end		-		-		3,549		3,792		1,661		114		19		-		9,135
Home Equity – open end		-		1,657		15,043		31,455		4,827		398		3,219		-		56,599
Commercial & Industrial (Non-Real Estate)		896		646		6,423		17,053		2,281		517		138		-		27,954
Total	$	962	$	6,221	$	120,254	$	241,779	$	72,144	$	18,705	$	18,938	$	-	$	479,003

Consumer Credit Exposure

Credit Risk Profile Based on Payment Activity

	Credit Cards		Consumer
Performing	$	2,730	$	62,046
Non performing		15		259
Total	$	2,745	$	62,305

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.

F & M BANK CORP.

Notes to (unaudited) Consolidated Financial Statements

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 will not make any contributions for the 2016 plan year. The following is a summary of net periodic pension costs for the three-month periods ended March 31, 2016 and 2015.

	Three Months Ended
	March 31, 2016			March 31, 2015

Service cost	$	157,968		$	162,083
Interest cost		113,224			102,736
Expected return on plan assets		(213,604	)		(209,704	)
Amortization of net obligation at transition		-			-
Amortization of prior service cost		(3,809	)		(3,809	)
Amortization of net loss		55,786			45,160
Net periodic pension cost	$	109,565		$	96,466

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, 2016 and December 31, 2015 and significant unobservable inputs used in the fair value measurements were as follows:

	Fair Value at March 31, 2016	Valuation Technique	Significant Unobservable Inputs	Range
Impaired Loans	$11,226	Discounted appraised value	Discount for selling costs and age of appraisals	15%-55%
Other Real Estate Owned	$2,450	Discounted appraised value	Discount for selling costs and age of appraisals	15%-55%

	Fair Value at December 31, 2015	Valuation Technique	Significant Unobservable Inputs	Range
Impaired Loans	$11,315	Discounted appraised value	Discount for selling costs and age of appraisals	15%-55%
Other Real Estate Owned	$2,128	Discounted appraised value	Discount for selling costs and age of appraisals	15%-55%

F & M BANK CORP.

Notes to (unaudited) Consolidated Financial Statements

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, 2016	Total		Level 1		Level 2		Level 3
U. S. Treasuries	$	4,030	$	-	$	4,030	$	-
Government sponsored enterprises		8,062		-		8,062		-
Mortgage-backed obligations of federal agencies		784		-		784		-
Marketable Equities		135		-		135		-
Investment securities available for sale		13,011		-		13,011		-

Total assets at fair value	$	13,011	$	-	$	13,011	$	-

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

Derivative financial instruments at fair value	$	15	$	-	$	15	$	-

December 31, 2015	Total		Level 1		Level 2		Level 3
U. S. Treasuries	$	4,021	$	-	$	4,021	$	-
Government sponsored enterprises		8,074		-		8,074		-
Mortgage-backed obligations of federal agencies		817		-		817		-
Marketable Equities		135		-		135		-
Investment securities available for sale		13,047		-		13,047		-

Total assets at fair value	$	13,047	$	-	$	13,047	$	-

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

Derivative financial instruments at fair value	$	15	$	-	$	15	$	-

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

March 31, 2016	Total		Level 1		Level 2		Level 3
Other Real Estate Owned	$	2,450		-		-	$	2,450
				-		-
Construction/Land Development		8,465		-		-		8,465
Farmland		-		-		-		-
Real Estate		990		-		-		990
Multi-Family		-		-		-		-
Commercial Real Estate		895		-		-		895
Home Equity – closed end		-		-		-		-
Home Equity – open end		820		-		-		820
Commercial & Industrial – Non-Real Estate		-		-		-		-
Consumer		-		-		-		-
Credit cards		-		-		-		-
Dealer Finance		56		-		-		56
Impaired loans		11,226		-		-		11,226

Total assets at fair value	$	13,676	$	-	$	-	$	13,676

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

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.

December 31, 2015	Total		Level 1		Level 2		Level 3
Other Real Estate Owned	$	2,128		-		-	$	2,128
				-		-
Construction/Land Development		9,161		-		-		9,161
Farmland		-		-		-		-
Real Estate		85		-		-		85
Multi-Family		-		-		-		-
Commercial Real Estate		872		-		-		872
Home Equity – closed end		-		-		-		-
Home Equity – open end		1,145		-		-		1,145
Commercial & Industrial – Non-Real Estate		-		-		-		-
Consumer		-		-		-		-
Credit cards		-		-		-		-
Dealer Finance		52		-		-		52
Impaired loans		11,315		-		-		11,315

Total assets at fair value	$	13,443		-	$	-	$	13,443

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, 2016 and December 31, 2015. 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, 2016				December 31, 2015
	Estimated		Carrying		Estimated		Carrying
	Fair Value		Value		Fair Value		Value
Financial Assets
Loans	$	566,210	$	556,894	$	555,762	$	544,053

Financial Liabilities
Time deposits		162,324		161,514		162,524		161,040
Long-term debt		47,812		47,179		48,565		48,161

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, 2016, there was one loan modification 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.

	March 31, 2016
			Pre-Modification		Post-Modification
			Outstanding		Outstanding
	Number of Contracts		Recorded Investment		Recorded Investment
Troubled Debt Restructurings
Consumer		1		17		17
Total		1	$	17	$	17

F & M BANK CORP.

Notes to (unaudited) Consolidated Financial Statements

Note 8. Troubled Debt Restructuring, continued

During the quarter ended March 31, 2016, there were no loans restructured in the previous 12 months, were in default or were on nonaccrual status. A restructured loan is considered in default when it becomes 90 days past due.

During the three months ended March 31, 2015, there were three loan modifications that were considered to be troubled debt restructurings.

	March 31, 2015
			Pre-Modification		Post-Modification
			Outstanding		Outstanding
	Number of Contracts		Recorded Investment		Recorded Investment
Troubled Debt Restructurings
Consumer		3		45		45
Total		3	$	45	$	45

During the quarter ended March 31, 2015, two real estate loans (outstanding recorded investment of $1,040,000) that had been restructured in the previous 12 months, were in default or were on nonaccrual status. 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 eleven 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 30 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, 2016 was $2,090,000 or $.60 per share, compared to $1,871,000 or $.53 in the same period in 2015, an increase of 11.70%. During the three months ended March 31, 2016, noninterest income decreased 6.17% and noninterest expense increased 7.99% during the same period. Net income from Bank operations adjusted for income from Parent activities is as follows:

In thousands	2016		2015

Net Income from Bank Operations	$	2,059	$	1,770
Income from Parent Company Activities		31		101
Net Income for the three months ended March 31	$	2,090	$	1,871

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 34, the 2016 year to date tax equivalent net interest income increased $494,000 or 7.77% compared to the same period in 2015. The tax equivalent adjustment to net interest income totaled $32,000 for the quarter. The yield on earning assets decreased .03%, while the cost of funds increased .07% compared to the same period in 2015.

Year to date, the combination of the increase in yield on assets and the decrease in cost of funds coupled with changes in balance sheet leverage has resulted in the net interest margin decreasing to 4.39%, a decrease of 7 basis points when compared to the same period in 2015. A schedule of the net interest margin for the three month periods ended March 31, 2016 and 2015 can be found in table I on page 34.

The Interest Sensitivity Analysis contained in Table II on page 35 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 41.18% of rate sensitive assets and 37.51% of rate sensitive liabilities are subject to repricing within one year. Due to the relatively flat yield curve, management has kept deposit rates low. The growth in earning assets and the growth in noninterest bearing accounts has resulted in the decrease in the positive GAP position in the one year time period.

Noninterest income decreased $46,000 or 6.17% for the three month period ended March 31, 2016. The decrease is primarily due to a decrease in VBS Mortgage income in 2016.

Noninterest expense increased $350,000 for the three month period ended March 31, 2016 as compared to 2015. Expense increased in the areas of salaries and benefits, pension, and data processing. As stated in the most recently available (December 31, 2015) Uniform Bank Performance Report, the Company’s and peer’s noninterest expenses averaged 2.83% and 2.85% 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 decreased since year end due to the growth in Loans Held for Sale.

Securities

The Company’s securities portfolio serves several purposes. Portions of the portfolio are held to assist the Company with 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, 2016, the market value of securities available for sale exceeded their cost by $35,000. The portfolio is made up of primarily agency securities with an average portfolio life of just over three years. This short average life results in less portfolio volatility and positions the Bank to redeploy assets in response to rising rates. There are $4,000,000 in securities that will mature in 2016 and $4,000,000 that are callable.

In reviewing investments as of March 31, 2016, 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 Company has loan concentrations within the portfolio in construction and development lending as well as hotel/motel 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 $556,894,000 increased $12.8 million at March 31, 2016 compared to December 31, 2015. Construction and land development increased $5.0 million, dealer finance portfolio increased $3.2 million and the real estate portfolio increased $2.3 million. Increases in other loan categories totaled $2.9 million with decreases in farmland, multifamily, consumer and credit cards.

Loans Held for Sale totaled $66,468,000 at March 31, 2016, an increase of $8,662,000 compared to December 31, 2015. Secondary market loan originations are typically subject to seasonal fluctuations in the early part of the year. The first quarter was very strong for both VBS Mortgage and Northpointe Bank.

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 $6,710,000 at March 31, 2016 compared to $6,526,000 at December 31, 2015. 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, 2016, the Company holds $2,450,000 of real estate which was acquired through foreclosure. This is an increase of $322,000 compared to December 31, 2015.

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

	March 31, 2016			December 31, 2015

Nonaccrual Loans
Real Estate	$	5,792		$	5,698
Commercial		217			109
Home Equity		39			40
Other		73			108
		6,121			5,955

Loans past due 90 days or more (excluding nonaccrual)
Real Estate		134			272
Commercial		163			25
Home Equity		50			107
Other		242			167
		589			571

Total Nonperforming loans	$	6,710		$	6,526

Restructured Loans current and performing:
Real Estate		8,418			8,713
Commercial		1,452			1,463
Home Equity		1,407			1,414
Other		85			91

Nonperforming loans as a percentage of loans held for investment		1.20	%		1.20	%

Net Charge Offs to total loans held for investment		.01	%		.04	%

Allowance for loan and lease losses to nonperforming loans		130.25	%		134.55	%

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, unimpaired/nonclassified loans and classified loans. Loans with identified potential losses include examiner and bank classified loans. Relationships rated substandard and 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.

Classified loans are segmented by call report code, past due status and risk rating. Loss rates are assigned based on actual loss experience over the last five years, calculated quarterly and multiplied by a risk factor. Each classified loan segment is given an appropriate factor.

Loans that are unimpaired/nonclassified are categorized by call report code and an estimate is calculated based on actual loss experience over the last five years. Dealer finance loans utilize a loss rate based on the highest loss in the last five years due the growth in the portfolio and the age of the division. Six environmental factors are used to reflect other changes in the collectability of the portfolio not captured by the historical loss date (loan growth, unemployment, interest rates, changes in underwriting practices, local real estate industry conditions, and experience of lending staff). The Board approves the loan loss provision for each quarter based on this evaluation.

The allowance for loan losses of $8,740,000 at March 31, 2016 is equal to 1.57% of loans held for investment. This compares to an allowance of $8,781,000 (1.61%) at December 31, 2015. Based on the evaluation of the loan portfolio described above, management has no funded the allowance in the first three months of 2015. Net charge-offs year to date totaled $41,000.

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 $1,032,000 since December 31, 2015. Time deposits increased $474,000 during this period while demand deposits and savings deposits increased $558,000. The increase in deposits can be attributed to growth in the new branches 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 $5.1 million in CDARS funding, which is a decrease of $400,000 over December 31, 2015.

Short-term borrowings

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, 2016 there were $38,000,000 in FHLB short-term borrowings, federal funds purchased totaled $4,197,000 and commercial repurchase agreements totaled $4,013,000. This compared to FHLB short-term borrowings of $20,000,000, federal funds purchased of $959,000 and commercial repurchase agreements of $3,995,000 at December 31, 2015.

Long-term borrowings

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 $982,000 of scheduled repayments and no additional borrowings during the quarter ended March 31, 2016.

Item 2.

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

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.

March 31, 2016 the Company implemented the Basel III capital requirements, resulting in total risk based capital and leverage ratios of 15.13% and 12.17%, respectively, as compared to year end of 15.38% and 12.18%, respectively. For the same period, Bank-only total risk based capital and leverage ratios were 14.91% and 12.00%, respectively, as compared to year end of 15.24% and 12.06%, respectively. Both the Company and the Bank also began reporting common equity tier 1 capital ratios of 12.26% and 13.65%, respectively. The Bank also reported a Capital conservation buffer of 6.91% as of March 31, 2016. 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. 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, 2016, the Company had a cumulative Gap Rate Sensitivity Ratio of 14.18% 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 35.

Item 2.

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

Effect of Newly Issued Accounting Standards

In January 2016, the FASB amended the Financial Instruments topic of the Accounting Standards Codification to address certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. The amendments will be effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company will apply the guidance by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. The amendments related to equity securities without readily determinable fair values will be applied prospectively to equity investments that exist as of the date of adoption of the amendments. The Company does not expect these amendments to have a material effect on its financial statements.

In February 2016, the FASB issued new guidance to change accounting for leases and that will generally require most leases to be recognized on the balance sheet. The new lease standard only contains targeted changes to accounting by lessors, however, lessees will be required to recognize most leases in their balance sheets as lease liabilities for lease payments and right-of-use assets representing the lessee’s rights to use the underlying assets for the lease terms for lease arrangements longer than 12 months. Under this approach, a lessee will account for most existing capital/finance leases as Type A leases and most existing operating leases as Type B leases. Type A and Type B leases have unique accounting and disclosure requirements. Existing sale-leaseback guidance, including guidance for real estate, will be replaced with a new model applicable to both lessees and lessors. The new guidance will be effective for fiscal years (and interim periods within those fiscal years) beginning after December 15, 2018. Early adoption is permitted for all companies and organizations. Management is currently analyzing the impact of the adoption of this guidance on the Company’s consolidated financial statements, including assessing changes that might be necessary to information technology systems, processes and internal controls to capture new data and address changes in financial reporting.

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, 2016							March 31, 2015
Average			Income/		Average					Income/		Average
	Balance2,4		Expense		Rates			Balance2,4		Expense		Rates
Interest income
Loans held for investment1,2	$	549,138	$	7,217		5.27	%	$	521,172	$	6,803		5.29	%
Loans held for sale		51,112		372		2.92	%		29,381		192		2.65	%
Federal funds sold		6,247		7		.45	%		8,744		5		.23	%
Interest bearing deposits		892		1		.45	%		1,975		-		-
Investments
Taxable 3		18,161		69		1.52	%		16,718		43		1.04	%
Partially taxable		125		-		-			125		-		-
Total earning assets	$	625,675	$	7,666		4.91	%	$	578,115	$	7,043		4.94	%
Interest Expense
Demand deposits		107,450		119		.44	%		120,287		157		.53	%
Savings		92,858		100		.43	%		66,330		33		.20	%
Time deposits		161,637		339		.85	%		183,267		364		.81	%
Short-term debt		29,326		18		.25	%		19,985		11		.22	%
Long-term debt		47,448		238		2.01	%		22,271		120		2.19	%
Total interest bearing liabilities	$	438,719	$	814		.74	%	$	412,140	$	685		.67	%

Tax equivalent net interest income 1			$	6,852						$	6,358

Net interest margin						4.39	%						4.46	%

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, 2016

(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	$	19,701		$	22,744		$	117,952		$	18,334		$	-		$	178,731
Installment		4,467			1,050			47,487			12,325			-			65,329
Real estate loans for investments		94,164			45,966			162,636			7,489			-			310,255
Loans held for sale		66,468			-			-			-			-			66,468
Credit cards		2,579			-			-			-			-			2,579
Interest bearing bank deposits		1,301			-			-			-			-			1,301
Investment securities		125			4,050			8,042			784			135			13,136
Total	$	188,805		$	73,810		$	336,117		$	38,932		$	135		$	637,799

Sources of funds
Interest bearing demand deposits	$	-		$	29,582		$	62,371		$	16,394		$	-		$	108,347
Savings deposits		-			19,155			57,466			19,155			-			95,776
Certificates of deposit $100,000 and over		12,484			10,204			31,214			-			-			53,902
Other certificates of deposit		15,147			36,461			56,004			-			-			107,612
Short-term borrowings		46,210			-			-			-			-			46,210
Long-term borrowings		982			1,964			12,857			31,376			-			47,179
Total	$	74,823		$	97,366		$	219,912		$	66,925		$	-		$	459,026

Discrete Gap	$	113,982		$	(23,556	)	$	116,205		$	(27,993	)	$	135		$	178,773

Cumulative Gap	$	113,982		$	90,426		$	206,631		$	178,638		$	178,773

Ratio of Cumulative Gap to Total Earning Assets		17.87	%		14.18	%		32.40	%		28.01	%		28.03	%

Table II reflects the earlier of the maturity or repricing dates for various assets and liabilities as of March 31, 2016. 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, 2015.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds –None

Item 3. Defaults Upon Senior Securities – None

Mine Safety Disclosures None

Item 5. Other Information – None

Item 6. Exhibits

(a) Exhibits

Exhibit No.		Description

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 10Q for the period ended March 31, 2016, 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.

	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 13, 2016

Exhibit Index:

Exhibit No.		Description

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 10Q for the period ended March 31, 2016, 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).

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