2020 Journal of Community Bank Studies

SECOND PLACE: James Madison University

has a renewed focus on developing this loan class. To elaborate, management is targeting an expansion in agricultural loans from 1% to 15-20% of its total portfolio value. Also, management recently hired an employee who specializes in the procurement and development of agricultural loans. In 2019, F&M Bank’s agricultural loans grew approximately $5 million. Further, during the first quarter of 2020, F&M Bank has added $5 million in agricultural- related loans (Hanna). 1.4 Asset Growth

As reflected in Table 2, growth in loans held for investment is the core driver behind net loans and leases development. 8 In 2019, net loans and leases declined led by a decrease in loans held for investment. This 2019 decline in loans held for investment is a result of management’s decision to partially write down a large problem asset. 9 Lastly, we compare F&M Bank’s net loans and leases growth to PG5. As Figure 5 illustrates, since 2017, F&M Bank’s growth in net loans and leases has been volatile. This volatility exists because management is working to remove

Our survey of asset growth for F&M Bank suggests total assets increase yearly supported by its mature loan portfolio. In Figure 4, we see that F&M Bank has experienced routine growth in assets covering the last 5 years. In fact, the year 2019 marks its seventh consecutive year of positive total asset growth. Next, we collect data from F&M Bank’s 2019 Form 10-K filing and summarize the major components of Net Loans & Leases in Table 2.

Figure 4: F&M Bank’s Total Asset Growth from 2015-2019 This figure depicts total assets in millions (black) and year-over-year asset growth rates in percentages (green). Source: UBPR, FFIEC

$813m

$779m

4.4%

$745m

$752m

3.6%

1%

12%

$665m

2015

2016

2017

2018

2019

Year

Table 2: Breakdown of Net Loans & Leases for F&M Bank from 2015-2019 This table depicts the balance sheet line-items in $1,000s. Data source: F&M Bank’s 2019 Form 10-K filing.

2015

2016

2017

2018

2019

Loans Held for Investment

$544,053

$591,636

$616,974

$638,799

$603,425

Less Allowance for Loan Losses

($8,781)

($7,543)

($6,044)

($5,240)

($8,390)

Net Loans Held for Investment

$535,272

$584,093

$610,930

$633,559

$595,035

Loans Held for Sale

$57,806

$62,735

$39,775

$55,910

$66,798

Net Loans & Leases

$593,078

$646,828

$650,705

$689,469

$661,833

27