F & M Bank (FMBM 3.08%), a Virginia-based community bank with a focus on traditional and relationship-driven banking services, reported its second-quarter 2025 earnings results on July 30, 2025. The headline news from the release centered around a significant expansion in net interest margin (GAAP), improvement in tangible book value per share (non-GAAP), and a sustained quarterly dividend. Earnings per share were $0.84, slightly below $0.86 for the same period in 2024, even as core profitability metrics and margin trends improved. These results came without available analyst estimates, so comparisons focus on period-to-period progress. Overall, the bank delivered continued growth in capital strength and margins, alongside stable loan demand, though some areas, like asset quality, showed mild deterioration.
| Metric | Q2 2025 | Q2 2024 | Y/Y Change |
|---|---|---|---|
| EPS (GAAP) | $0.84 | $0.86 | (2.3%) |
| Revenue (GAAP) | N/A | N/A | N/A |
| Net Interest Margin | 3.48% | 2.72% | 0.76 pp |
| Return on Average Equity | 12.81% | 15.58% | (2.77 pp) |
| Tangible Book Value per Share | $25.68 | $22.62 | 13.5% |
About F & M Bank
F & M Bank is a regional community bank focused on commercial and personal banking products. It serves customers in Virginia through a combination of branch offices and digital channels, offering services such as checking and savings accounts, mortgage loans, commercial loans, auto loans, and wealth management.
The bank’s main revenue comes from interest and fees from loans, which makes management of lending risk, interest rates, and loan quality crucial. 72.7% of its revenue came from loan-related activities for the fiscal year ended December 31, 2024, so market trends in borrowing rates, housing, and commercial lending have a direct impact on performance. Regulatory compliance and capital strength are also key focus areas for the bank’s long-term operation and growth.
Quarter Highlights: Growth, Margin, and Caution
During the quarter, F & M Bank saw noticeable progress in profitability. Net income (GAAP) reached $3.0 million, up 21% from the previous quarter, as the current quarter faced modest headwinds from credit costs and a slight dip in fee income. Return on average assets, a metric that shows how efficiently a bank generates earnings from its assets, rose to 0.91% (GAAP), compared to 0.76% in the previous quarter. Return on average equity stood at 12.81%, below 15.58% for the same period in 2024.
Net interest income (GAAP) improved significantly. This was driven in part by a sharp decrease in interest expense and a modest jump in income from resolved nonperforming loans. The one-time benefit from $601,000 of recovered interest and fees supported this result; without it, margin expansion would have been more moderate. Noninterest income, from sources like wealth management and title insurance services, declined slightly due to lower mortgage and advisory fees, but was partly offset by gains in card and title service revenue.
On the expense side, noninterest costs fell by $812,000 from the previous quarter, reflecting lower compensation outlays after higher commissions and bonuses were paid earlier in the year. Tangible book value per share (non-GAAP) increased to $25.68, up from $22.62 for the same period in 2024, and reflects the growth in shareholder equity and retained earnings.
The bank’s loan portfolio continued to expand. Total loans held for investment (GAAP) reached $848.8 million, rising $21.8 million during the period. Growth from December 31, 2024, to June 30, 2025, was led by residential mortgage loans (up $15.7 million) and farmland-secured loans (up $19.2 million), while auto and construction loans declined over the same period. The portfolio mix shifted as auto loan balances fell by $14.3 million and construction by $19.4 million since year-end 2024, while agricultural and residential segments posted gains. Deposit balances remained stable, ending at $1.20 billion, though there was a small net decrease, most notably in interest-bearing (especially time) deposits.
Asset quality metrics were mixed. A provision for credit losses of $1.2 million (GAAP) was made, reversing the net recoveries seen in the previous quarter, as the bank increased reserves by $610,000 for specific credits and covered $532,000 in net charge-offs. Nonperforming loans, meaning loans on which borrowers are not making required payments, rose modestly to 0.90% of total loans, and the net charge-off rate increased to 0.25%. This suggests a slight uptick in credit stress, even as overall reserve coverage remains strong at 108.60% of nonperforming loans. The bank’s capital ratios, such as a leverage ratio of 8.89% and a total risk-based capital ratio of 13.73%, remain well above regulatory minimums.
though it is important to note that a one-off recovery of interest on two resolved loans gave a temporary boost to reported net interest income. The bank’s liquidity position was stable, with over $211 million available on its balance sheet at June 30, 2025, and access to additional credit facilities as needed. The quarterly dividend was maintained at $0.26 per share, representing a 4.3% annualized yield based on the recent share price as of July 24, 2025, with no change from prior periods. This marked the continuation of a multi-quarter trend without increases or decreases.
Looking Ahead: Outlook and Trends to Monitor
Management communicated confidence that loan demand will remain steady into the third quarter. While loan growth and a still-solid capital base offer support for near-term results, specific quantitative guidance for revenue or profit was not provided. The bank’s leadership has not offered formal forward guidance on earnings or revenue ranges for future periods.
Investors and stakeholders should watch a few key trends in the coming quarters. These include ongoing asset quality metrics, particularly nonperforming loans and net charge-offs as small rises may signal changing risk in the lending book. Deposit trends are another area of focus, especially the retention of interest-bearing balances, as changes could impact funding costs and profitability. With the one-time benefit to net interest margin unlikely to repeat, underlying trends in core margin and loan yields will be particularly important to watch. No material events or regulatory changes were signaled that would affect the outlook in the near term.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
