2020 Journal of Community Bank Studies

2020 COMMUNITY BANK CASE STUDY COMPETITION

Endnotes 1. De-risking is, “the practice of banks limiting certain services or ending their relationships with customers to, among other things, avoid perceived regulatory concerns about facilitating money laundering” (U.S. Government Accountability Office). 2. Namely, a system input error relating to the deferred cost amortization of indirect dealer loans. 3. Peer Group 5 is defined as an Insured Commercial Bank with average assets between $300 million and $1 billion. 4. Specifically, from revenue tied to VST Title, F&M Financial services, and F&MMortgage, as well as service charges on deposit accounts (10-K). 5. F&M Bank has opened several branches over the last 5 years. 2015: Craigsville & Staunton; 2016: Grottoes; 2017: Myers Corner & Coffman’s Corner; 2018: Timberville; 2019: Stuarts Draft. 6. Organic loan growth is defined as internal growth in loan operations without acquisition or merger of loan portfolios. 7. Given the ambiguity surrounding the classification of loans, it is difficult to determine where each contract should be coded. As such, this category is likely larger than reported. 8. Since the launching of F&M Bank’s Dealer Finance Division in 2012, commercial loans have been its best performing sector, growing at an average YOY rate of 7.29% over the last five years. (10-K) 9. A write down is an accounting measure that reduces the value of an asset. 10. Community banks are subject to a standardized approach when calculating risk-weighted assets. For this method, assets are assigned to a risk category and weighted based on their credit risk and the amount of the asset on its balance sheet. 11. A mortgage aggregator is a broker who buys mortgage loans from financial institutions, aggregates them into mortgage-backed securities, and sells them in the secondary market. 12. In 2019, F&M Bank’s Loans Held for Sale as a % of average assets totaled 8.19%. In contrast, Peer Group 5’s figure was only 0.13%. 13. Peer groups within YellowHammer are defined as accounts used for personal or business purposes.

38