Financial Condition

Dear Clients,

Thanks to you, the valued clients of F&M Bank, 2014 was a very good year.  We were able to grow our loan portfolio by 13.9% and increase our total assets by 13.2% to over $409 million at year end.  The increase in loan volume was all organic in origination and was lent out within our markets.  At the same time we were able to grow our deposit base by 7.4% to over $331 million.  With a 25% increase in net income for 2014 we were able to build our total equity and reserves to nearly $44 million.  The excellent quality of our loan portfolio continues to play a major role as we grow.  With that being said however, we believe in continuing to strengthen our loan loss reserves to maintain stability for our clients and the communities we serve.  

In general terms, the economies in our urban markets of Eastern Iowa and Minnesota continued to prosper in 2014.  Business activity was strong and unemployment figures were quite low in comparison to national averages.  The Ag economy has provided more of a challenge in our more rural markets.  After several strong years, grain commodity prices experienced significant reductions in 2014.  Should these lower prices continue for the next few years as projected, it could have far reaching negative affects in the agricultural sector.  For those that have diversified into the livestock industry, the economic environment has been more optimistic.  Lower grain prices have meant lower feed costs, which coupled with good demand, has resulted in a long awaited return to profitability in livestock.

Although it has been in existence for several years, fraud has become “Public Enemy No. 1” in the financial industry.  As technology continues to change banking and our world, everyone must remain diligent in our fight against fraud. In our efforts to help protect you, we added two new products in 2014.  SHAZAM BOLT$ is a free mobile application and email alert service that empowers you, the Debit Card holder, to assist in detecting potential fraud on your account through your smartphone, tablet, or personal computer.  With this free application, alerts can be set and notifications will be received to take immediate action if the transaction is fraudulent.  Another piece of protection against fraud we now offer our clients is ID TheftSmart.  This provides a credit report, a credit score and ongoing credit file monitoring to help in early detection of potential identity theft.  We hope that you, our valued client, will be proactive and vigilant in protecting your confidential information, but if you become one of the unfortunate ones to experience fraud, ID TheftSmart provides licensed investigators to counsel you in restoring your identity and answering any questions or concerns.  

While we reached several milestones in 2014, such as, our 20th year of operation in the Cedar Rapids market and our 10th year in the Anamosa market, 2015 will be an eventful year as well.  On January 1, 2015, Security Savings Bank which has offices in Eagle Grove, Goldfield, and Clarion, will merge into F&M Bank.  Under common ownership, we have been affiliated with Security Savings Bank for the past 36 years.  This change will unify operational efficiencies and will not affect staffing or the level of care for our clients in our various markets.  Security Savings Bank will continue to operate under its name, but as a division of F&M Bank.  2015 will also bring about the addition of a third location in the Cedar Rapids market near the Westdale Mall, as well as, celebrating our fifth anniversary of our expansion into the Twin Cities market.

All of these achievements would not be possible without two things, our tremendous team, whose goal every day is to exceed your expectations with prompt personalized service, and you, our valued clients.  We appreciate the trust you have placed in us and recognize that we will not succeed unless you do.  Thank you for your continued support and best wishes for an outstanding 2015.



Timothy R. German

Executive Vice President