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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10‑Q

☒ Quarterly report Under Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended June 30, 2025

☐ 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)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
None

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 ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files. Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐	Accelerated filer ☐	Non-accelerated filer ☒	Smaller reporting company ☒
Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class		Outstanding at August 12, 2025
Common Stock, par value ‑ $5 per share		3,557,267 shares

F & M BANK CORP.

Quarterly Report on Form 10-Q

For the quarterly period ended June 30, 2025

Table of Contents

		Page

Part I	Financial Information

Item 1.	Financial Statements	3

	Consolidated Balance Sheets – June 30, 2025 and December 31, 2024	3

	Consolidated Statements of Income – Three Months Ended June 30, 2025 and 2024	4

	Consolidated Statements of Income – Six Months Ended June 30, 2025 and 2024	5

	Consolidated Statements of Comprehensive Income – Three and Six Months Ended June 30, 2025 and 2024	6

	Consolidated Statements of Changes in Shareholders’ Equity - Three Months Ended June 30, 2025 and 2024	7

	Consolidated Statements of Changes in Shareholders’ Equity - Six Months Ended June 30, 2025 and 2024	7

	Consolidated Statements of Cash Flows – Six Months Ended June 30, 2025 and 2024	8

	Notes to Consolidated Financial Statements	9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	33

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	43

Item 4.	Controls and Procedures	43

Part II	Other Information

Item 1.	Legal Proceedings	44

Item 1A.	Risk Factors	44

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	44

Item 3.	Defaults Upon Senior Securities	44

Item 4.	Mine Safety Disclosures	44

Item 5.	Other Information	44

Item 6.	Exhibits	44

Signatures		45

Certifications

Table of Contents

Part I Financial Information

Item 1 Financial Statements

F & M BANK CORP.

Consolidated Balance Sheets

(Dollars in thousands, except share data)

	June 30,			December 31,
	2025			2024*
	*(Unaudited)*
Assets
Cash and due from banks	$	20,457		$	18,685
Money market funds and interest-bearing deposits in other banks		518			298
Federal funds sold		26,298			37,524
Cash and cash equivalents		47,273			56,507

Securities available for sale, at fair value		340,021			327,670
Other investments		2,254			2,249
Loans held for sale, at fair value		2,280			2,283

Loans held for investment, net of deferred fees and costs		848,773			839,949
Less: allowance for credit losses		(8,312	)		(8,129	)
Net loans held for investment		840,461			831,820

Bank premises and equipment, net		21,776			22,192
Other real estate owned		-			77
Interest receivable		5,163			4,939
Goodwill		3,082			3,082
Bank owned life insurance		23,989			23,607
Deferred tax asset, net		8,136			9,465
Other assets		17,489			18,120
Total Assets	$	1,311,924		$	1,302,011
Liabilities
Deposits:
Noninterest bearing	$	278,322		$	260,301
Interest bearing		918,129			934,804
Total deposits		1,196,451			1,195,105

Long-term debt		6,996			6,975
Other liabilities		13,736			13,793
Total Liabilities		1,217,183			1,215,873

Commitments and contingencies

Shareholders’ Equity
Common stock, $5 par value, 6,000,000 shares authorized, 3,567,056 (2025) and 3,525,649 (2024) shares issued and outstanding		17,491			17,383
Additional paid in capital		11,674			11,463
Retained earnings		88,247			84,669
Accumulated other comprehensive loss		(22,671	)		(27,377	)
Total Shareholders’ Equity		94,741			86,138
Total Liabilities and Shareholders’ Equity	$	1,311,924		$	1,302,011

*2024 derived from audited consolidated financial statements.

See Notes to Consolidated Financial Statements

Table of Contents

F & M BANK CORP.

Consolidated Statements of Income

(Dollars in thousands, except per share data)

(Unaudited)

	Three Months Ended June 30,
*Interest and Dividend income*	2025			2024
Interest and fees on loans held for investment	$	13,971		$	13,494
Interest and fees on loans held for sale		20			46
Interest from money market funds and federal funds sold		385			216
Interest and dividends on interest bearing deposits and other investments		58			129
Interest from securities available for sale		2,378			1,835
Total interest and dividend income		16,812			15,720

*Interest expense*
Total interest on deposits		6,168			6,950
Interest on short-term debt		1			453
Interest on long-term debt		116			116
Total interest expense		6,285			7,519

*Net interest income*		10,527			8,201

Provision for (recovery of) credit losses - loans		1,082			(413	)
Provision for (recovery of) credit losses – unfunded commitments		105			(44	)
*Total Provision for (Recovery of) Credit Losses*		1,187			(457	)

*Net Interest Income After Provision for (Recovery of) Credit Losses*		9,340			8,658

*Noninterest income*
Service charges on deposit accounts		307			292
Wealth management income		560			629
Mortgage banking income		358			762
Title insurance income		584			427
Income on bank owned life insurance		215			185
Low income housing partnership amortization		(196	)		(197	)
ATM and check card fees		875			802
Other operating income		89			98
Total noninterest income		2,792			2,998

*Noninterest expense*
Salaries		3,704			3,845
Employee benefits		923			352
Occupancy expense		387			402
Equipment expense		298			356
FDIC assessment		246			263
Legal and professional expense		527			473
ATM and check card fees		229			223
Data processing fees		855			737
Other operating expenses		1,543			1,519
Total noninterest expense		8,712			8,170

*Income before income taxes*		3,420			3,486
Income tax expense		455			471
*Net Income*	$	2,965		$	3,015
*Per Common Share Data*
Net income (basic and diluted)	$	0.84		$	0.86
Cash dividends on common stock		0.26			0.26
Weighted average common shares outstanding (basic and diluted)		3,564,133			3,517,122

See Notes to Consolidated Financial Statements

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F & M BANK CORP.

Consolidated Statements of Income

(Dollars in thousands, except per share data)

(Unaudited)

	Six Months Ended June 30,
*Interest and Dividend income*	2025			2024
Interest and fees on loans held for investment	$	27,436		$	26,846
Interest and fees on loans held for sale		45			64
Interest from money market funds and federal funds sold		1,037			373
Interest and dividends on interest bearing deposits and other investments		88			301
Interest from securities available for sale		4,471			3,713
Total interest and dividend income		33,077			31,297

*Interest expense*
Total interest on deposits		12,868			13,288
Interest on short-term debt		4			1,449
Interest on long-term debt		231			231
Total interest expense		13,103			14,968

*Net interest income*		19,974			16,329

Provision for credit losses - loans		902			481
Provision for (recovery of) credit losses – unfunded commitments		181			(115	)
*Total Provision for Credit Losses*		1,083			366

*Net Interest Income After Provision for Credit Losses*		18,891			15,963

*Noninterest income*
Service charges on deposit accounts		620			565
Wealth management income		1,236			1,211
Mortgage banking income		960			1,150
Title insurance income		939			730
Income on bank owned life insurance		424			368
Low income housing partnership amortization		(393	)		(393	)
ATM and check card fees		1,639			1,527
Other operating income		212			174
Total noninterest income		5,637			5,332

*Noninterest expense*
Salaries		7,831			7,625
Employee benefits		2,038			1,218
Occupancy expense		795			776
Equipment expense		626			679
FDIC assessment		511			521
Legal and professional expense		1,006			958
ATM and check card fees		556			515
Data processing fees		1,770			1,458
Other operating expenses		3,104			2,842
Total noninterest expense		18,237			16,592

*Income before income taxes*		6,291			4,703
Income tax expense		869			470
*Net Income*	$	5,422		$	4,233
*Per Common Share Data*
Net income (basic and diluted)	$	1.53		$	1.21
Cash dividends on common stock		0.52			0.52
Weighted average common shares outstanding (basic and diluted)		3,547,513			3,503,790

See Notes to Consolidated Financial Statements

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F & M BANK CORP.

Consolidated Statements of Comprehensive Income

(Dollars in thousands)

(Unaudited)

	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024

Net Income	$	2,965	$	3,015	$	5,422	$	4,233

Other comprehensive income:
Unrealized gain (loss) on available-for sale securities, net of income tax expense of $369 and $460 for the three months and $1,251 and $191 for the six months ended June 30, 2025 and 2024, respectively		1,169		1,729		4,706		719

Total other comprehensive income		1,169		1,729		4,706		719

Total comprehensive income	$	4,134	$	4,744	$	10,128	$	4,952

See Notes to Consolidated Financial Statements

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F & M BANK CORP.

Consolidated Statements of Changes in Shareholders’ Equity

(Dollars in thousands)

(Unaudited)

Three Months Ended June 30, 2025 and 2024.

	Common Stock					Additional Paid in Capital		Retained Earnings			Accumulated Other Comprehensive Loss			Total
	Shares			Amount
*Balance, March 31, 2024*		3,516,013		$	17,318	$	11,097	$	81,346		$	(32,027	)	$	77,734
Net income		-			-		-		3,015			-			3,015
Other comprehensive income		-			-		-		-			1,729			1,729
Dividends on common stock		-			-		-		(914	)		-			(914	)
Common stock issued		3,104			15		37		-			-			52
*Balance, June 30, 2024*		3,519,117		$	17,333	$	11,134	$	83,447		$	(30,298	)	$	81,616

*Balance, March 31, 2025*		3,563,938		$	17,466	$	11,476	$	86,209		$	(23,840	)	$	91,311
Net income		-			-		-		2,965			-			2,965
Other comprehensive income		-			-		-		-			1,169			1,169
Dividends on common stock		-			-		-		(927	)		-			(927	)
Common stock issued		5,020			25		76		-			-			101
Net restricted common stock activity		(1,902	)		-		-		-			-			-
Stock-based compensation expense		-			-		122		-			-			122
*Balance, June 30, 2025*		3,567,056		$	17,491	$	11,674	$	88,247		$	(22,671	)	$	94,741

Six Months Ended June 30, 2025 and 2024.

	Common Stock				Additional Paid in Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Total
	Shares		Amount
*Balance December 31, 2023*		3,485,570	$	17,263	$	11,043		$	81,034		$	(31,017	)	$	78,323
Net income		-		-		-			4,233			-			4,233
Other comprehensive income		-		-		-			-			719			719
Dividends on common stock		-		-		-			(1,820	)		-			(1,820	)
Common stock issued		5,818		29		73			-			-			102
Net restricted common stock activity		27,729		-		-			-			-			-
Vesting of time based stock awards issued at date of grant, net of shares withheld for payroll taxes		-		41		(41	)		-			-			-
Stock-based compensation expense		-		-		59			-			-			59
*Balance, June 30, 2024*		3,519,117	$	17,333	$	11,134		$	83,447		$	(30,298	)	$	81,616

*Balance December 31, 2024*		3,525,649	$	17,383	$	11,463		$	84,669		$	(27,377	)	$	86,138
Net income		-		-		-			5,422			-			5,422
Other comprehensive income		-		-		-			-			4,706			4,706
Dividends on common stock		-		-		-			(1,844	)		-			(1,844	)
Common stock issued		10,106		50		152			-			-			202
Net restricted common stock activity		31,301		-		-			-			-			-
Vesting of time based stock awards issued at date of grant, net of shares withheld for payroll taxes		-		58		(135	)		-			-			(77	)
Stock-based compensation expense		-		-		194			-			-			194
*Balance, June 30, 2025*		3,567,056	$	17,491	$	11,674		$	88,247		$	(22,671	)	$	94,741

See Notes to Consolidated Financial Statements

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F & M BANK CORP.

Consolidated Statements of Cash Flows

(Dollars in thousands)

(Unaudited)

	Six Months Ended June 30,
	2025			2024
*Cash flows from operating activities*
Net income	$	5,422		$	4,233
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		683			755
Amortization of intangibles		16			14
Amortization of securities		348			364
Proceeds from loans held for sale		24,563			27,112
Loans held for sale originated		(24,008	)		(29,309	)
Gain on sale of loans held for sale		(552	)		(642	)
Provision for credit losses		1,083			366
Increase in interest receivable		(224	)		(89	)
Decrease (increase) in deferred tax asset		80			(3	)
Decrease (increase) in other assets		307			(147	)
Decrease in other liabilities		(240	)		(222	)
Amortization of limited partnership investments		393			393
Amortization of debt issuance costs		21			22
Income from life insurance investment		(424	)		(367	)
Gain on sale of fixed assets		-			(11	)
Gain on the sale of assets held for sale		(43	)		-
Gain on the sale of OREO		(73	)		(21	)
Stock-based compensation expense		194			59
Net cash provided by operating activities		7,546			2,507

*Cash flows from investing activities*
Proceeds from maturity of investments available for sale		21,360			10,000
Purchases of investments available for sale		(40,863	)		-
Proceeds from paydowns of mortgage-backed securities		12,761			7,005
Investment in restricted stock, net		(5	)		1,867
Net increase in loans held for investment		(9,543	)		(5,235	)
Proceeds from the sale of fixed assets		-			372
Proceeds from the sale of OREO		150			76
Net purchase of property and equipment		(267	)		(153	)
Net cash (used by) provided by investing activities		(16,407	)		13,932

*Cash flows from financing activities*
Net change in deposits		1,346			52,021
Net change in short-term debt		-			(40,000	)
Dividends paid in cash		(1,844	)		(1,820	)
Proceeds from issuance of common stock		125			102
Net cash (used by) provided by financing activities		(373	)		10,303

*Net (decrease) increase in Cash and Cash Equivalents*		(9,234	)		26,742
*Cash and cash equivalents, beginning of period*		56,507			23,717
*Cash and cash equivalents, end of period*	$	47,273		$	50,459
*Supplemental Cash Flow information:*
Cash paid for: Interest	$	13,539		$	14,400
Taxes		450			-
*Supplemental non-cash disclosures:*
Change in unrealized loss on securities available for sale	$	5,957		$	907

See Notes to Consolidated Financial Statements

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Notes to the Consolidated Financial Statements

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The Consolidated Financial Statements include the accounts of F&M Bank Corp. (the “Company”), Farmers & Merchants Bank (the “Bank”), Farmers & Merchants Financial Services, Inc. (“FMFS”), VBS Mortgage, LLC (dba “F&M Mortgage”), and VSTitle, LLC (“VST”), with all significant intercompany accounts and transactions eliminated. FMFS was dissolved effective April 25, 2024, and its legal existence was subsequently terminated on June 7, 2024. The operations, assets, and liabilities of FMFS were transferred to the Bank. Effective on May 15, 2025, the operations, assets and liabilities of F&M Mortgage were transferred to the Bank.

The accounting and reporting policies of the Company conform to accounting principles generally accepted in the United States of America (“GAAP”) and to accepted practices within the banking industry.

Basis of Presentation and Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The material estimate that is particularly susceptible to significant change in the near term relates to the determination of the allowance for credit losses. The unaudited consolidated financial statements in this report have been prepared in accordance with GAAP for interim financial information. Accordingly, these financial statements do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The unaudited consolidated financial statements include, in the opinion of management, all adjustments necessary to present a fair statement of the financial position and the results of operations for all periods presented. All such adjustments are of a normal recurring nature. The results of operations in the interim statements are not necessarily indicative of the results of operations that the Company and its subsidiaries may achieve for future interim periods or the entire year. For further information, refer to the consolidated financial statements and footnotes included in the Company's Annual Report on Form 10-K for the year ended December 31, 2024.

Segment Reporting

The Company's revenue is primarily derived from the business of banking. The Company's financial performance is monitored on a consolidated basis by the Chief Executive Officer, who is designated the chief operating decision maker (“CODM”), based upon information provided about the Company’s products and services offered. The segments are also distinguished by the level of information provided to the CODM, who uses such information to review performance of various components of the business, which are then aggregated if the operating performance of products and customers are similar. The CODM evaluates the financial performance of the Company’s business components such as revenue streams, significant expenses, and budget to actual results in assessing the Company’s segments and in determination of allocated resources. The presentation of financial performance to the CODM is consistent with amounts and financial statement line items shown in the Company's consoldiated balance sheets and consolidated statements of income. Additionally, the Company's significant expenses are adequately segmented by category and amount in the consolidated statements of income to include all significant items when considering both qualitative and quantitative factors. Significant expenses of the Company include salaries and employee benefits, occupancy expense, equipment expense, data processing fees and legal and professional expenses.

All of the Company's financial results are similar and considered by management to be aggregated into one reportable operating segment. While the Company has assigned certain management responsibilities by region and business-line, the Company's CODM evaluates financial performance on a Company-wide basis. The majority of the Company's revenue is from the business of banking and the Company's assigned regions have similar economic characteristics, products, services and customers. Accordingly, all of the Company's operations are considered by management to be aggregated in one reportable operating segment.

Reclassification

Certain reclassifications have been made to prior period amounts to conform to current period presentation. None of these reclassifications are considered material and have no impact on net income or shareholders’ equity.

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Cash and Cash Equivalents

For purposes of reporting cash flows, cash and cash equivalents include cash on hand, amounts due from banks, federal funds sold, money market funds and interest-bearing deposits. Generally, federal funds are purchased and sold on an overnight basis.

Allowance for Credit Losses – Securities Available for Sale

For securities available for sale, management evaluates all investments in an unrealized loss position on a quarterly basis, and more frequently when economic or market conditions warrant such evaluation. If the Company has the intent to sell the security or it is more likely than not that the Company will be required to sell the security, the security is written down to fair value and the entire loss is recorded in earnings.

If either of the above criteria is not met, the Company evaluates whether the decline in fair value is the result of credit losses or other factors. In making the assessment, the Company may consider various factors including the extent to which fair value is less than amortized cost, performance on any underlying collateral, downgrades in the ratings of the security by a rating agency, the failure of the issuer to make scheduled interest or principal payments and adverse conditions specifically related to the security. If the assessment indicates that a credit loss exists, the present value of cash flows expected to be collected are compared to the amortized cost basis of the security and any excess is recorded as an allowance for credit loss, limited by the amount that the fair value is less than the amortized cost basis. Any amount of unrealized loss that has not been recorded through an allowance for credit loss is recognized in other comprehensive income.

Changes in the allowance for credit loss are recorded as provision for (or reversal of) credit loss expense. Losses are charged against the allowance for credit loss when management believes a security available for sale is confirmed to be uncollectible or when either of the criteria regarding intent or requirement to sell is met. At June 30, 2025 and December 31, 2025, there was no allowance for credit loss related to the securities available for sale portfolio.

Accrued interest receivable on securities available for sale totaled $1.5 million at June 30, 2025 and December 31, 2024, and was excluded from the estimate of credit losses.

Loans

Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at amortized cost. Amortized cost is the principal balance outstanding, net of discounts and deferred fees and costs. Accrued interest receivable related to loans totaled $3.6 million and $3.4 million at June 30, 2025 and December 31, 2024, respectively, and was reported in accrued interest receivable on the consolidated balance sheets. Interest income is accrued on the unpaid principal balance. Loan origination fees, net of certain direct origination costs, are deferred and recognized in interest income using methods that approximate a level yield without anticipating prepayments.

The accrual of interest is generally discontinued when a loan becomes 90 days past due and is not well collateralized and in the process of collection, or when management believes, after considering economic and business conditions and collection efforts, that the principal or interest will not be collectible in the normal course of business. Past due status is based on contractual terms of the loan. A loan is considered to be past due when a scheduled payment has not been received 30 days after the contractual due date.

All accrued interest is reversed against interest income when a loan is placed on nonaccrual status. Interest received on such loans is accounted for using the cost-recovery method, until qualifying for return to accrual. Under the cost-recovery method, interest income is not recognized until the loan balance is reduced to zero. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current, there is a sustained period of repayment performance, and future payments are reasonably assured.

Allowance for Credit Losses – Loans

The allowance for credit losses is a valuation account that is deducted from the loans' amortized cost basis to present the net amount expected to be collected on the loans. Loans are charged off against the allowance when management believes the uncollectibility of a loan balance is confirmed. Expected recoveries do not exceed the aggregate of amounts previously charged-off and expected to be charged-off. Accrued interest receivable is excluded from the estimate of credit losses. The allowance for credit losses represents management’s estimate of lifetime credit losses inherent in loans as of the balance sheet date. The allowance for credit losses is estimated by management using relevant available information, from both internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts.

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The Company utilizes a Qualitative Scorecard (“scorecard”) to adjust the historical loss information, as necessary, to reflect the Company’s expectations about the future. For each segment, the scorecard calculates the difference between the quantitative expected credit loss and the high watermark average remaining maturity loss rates. This difference is the maximum qualitative adjustment that can be applied to that segment. Due to the low number of losses in the Bank’s portfolio, in particular from 2008-2012, a number of pool sets leverage peer data to calculate the overall loss rate. The Company believes that in order to provide a reasonable and supportable loss rate, data representative of losses during a financial downturn will provide a better representation of the perceived risk in the portfolio. In determining how to apply the weightings for the various qualitative factors, management assessed which factors would have the highest impact on potential loan losses. The economy and problem loan trends were determined to have the most significant effect on the estimated losses. The most influential factor on potential loan losses was economic conditions, with a weighting of 20%-25%. The Company evaluates the weighting applied to each pool on an annual basis.

The Company measures expected credit losses for loans on a pooled basis when similar risk characteristics exist. The Company has identified the following portfolio segments and calculates the allowance for credit losses for each using a remaining life methodology:

1-4 family residential construction. Construction loans are subject to general risks from changing housing market trends and economic conditions that may impact demand for completed properties, availability of building materials, and the costs of completion. Changes in construction costs and interest rates may impact the borrower’s ability to service the debt. These risks are measured by market-area unemployment rates, bankruptcy rates, housing and commercial building market trends, and interest rates. Risks specific to the borrower are also evaluated, including previous repayment history, debt service ability, and current and projected loan-to-value ratios for the collateral.

Other construction, land development and land. Construction and land development loans are subject to general risks from changing commercial building and housing market trends and economic conditions that may impact demand for completed properties and the costs of completion. Completed properties that do not sell or become leased within originally expected timeframes may impact the borrower’s ability to service the debt. These risks are measured by market-area unemployment rates, bankruptcy rates, housing and commercial building market trends, and interest rates. Risks specific to the borrower are also evaluated, including previous repayment history, debt service ability, and current and projected loan-to-value ratios for the collateral.

Secured by farmland. Farmland loans are loans secured by agricultural property. These loans are subject to risks associated with the value of the underlying farmland and the cash flows of the borrower’s farming operations.

Home equity - open end. The home-equity loan portfolio carries risks associated with the creditworthiness of the borrower and changes in loan-to-value ratios. The Company manages these risks through policies and procedures such as limiting loan-to-value ratios at origination, experienced underwriting, and requiring standards for appraisers.

Real estate. Real estate loans are for consumer residential 1-4 family real estate where the credit quality is subject to risks associated with the borrower’s repayment ability and collateral value, measured generally by analyzing local unemployment and bankruptcy trends, and local housing market trends and interest rates. Risks specific to a borrower are determined by previous repayment history, loan-to-value ratios, and debt-to-income ratios.

Home equity - closed end. The home-equity closed-end loan portfolio carries risks associated with the creditworthiness of the borrower, changes in loan-to-value ratios, and subordinate lien positions. The Company manages these risks through policies and procedures such as limiting loan-to-value ratios at origination, experienced underwriting, and requiring standards for appraisers.

Multifamily. Multifamily loans are loans secured by multi-unit residential property. These loans are subject to risks associated with the value of the underlying property, availability of rental units, as well as the successful operation and management of the property.

Owner-occupied commercial real estate. The commercial real estate segment includes loans secured by commercial real estate occupied by the owner/borrower. Loans in this segment are impacted by economic risks from changing commercial real estate markets, business bankruptcy rates, local unemployment rates and interest rate trends that would impact the businesses housed by the commercial real estate.

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Other commercial real estate. The other commercial real estate segment includes loans secured by commercial real estate leased to non-owners. Loans in the commercial real estate segment are impacted by economic risks from changing commercial real estate markets, rental markets for commercial buildings, business bankruptcy rates, local unemployment rates and interest rate trends that would impact the businesses housed by the commercial real estate.

Agriculture loans. Agriculture loans are secured by agricultural equipment or are unsecured. Credit risk for these loans is subject to economic conditions, generally monitored by local agricultural/farming trends, interest rates, and borrower repayment ability and collateral value (if secured).

Commercial and industrial. Commercial and industrial loans are secured by collateral other than real estate or are unsecured. Credit risk for these loans is subject to economic conditions, generally monitored by local business bankruptcy trends, interest rates, and borrower repayment ability and collateral value (if secured).

Credit cards. Credit card loan portfolios carry risks associated with the creditworthiness of the borrower and changes in the economic environment. The Company manages these risks through policies and procedures such as experienced underwriting, maximum debt to income ratios, and minimum borrower credit scores.

Automobile loans. Automobile loans generally carry certain risks associated with the values of the collateral and borrower’s ability to repay the loan. Lending on new and used vehicles is subject to the risk of changing values in the availability of vehicles and the resale value.

Other consumer loans. Other consumer loans may be secured or unsecured. Credit risk stems primarily from the borrower’s ability to repay. If the loan is secured, the Company analyzes loan-to-value ratios. All consumer non-real estate loans are analyzed for debt-to-income ratios and previous credit history, as well as for general risks to the portfolio, including local unemployment rates, personal bankruptcy rates and interest rates.

Municipal loans. Municipal loans are unsecured loans generally made to local towns within the Bank’s trade area. Credit risk is based on the cash flow and management of the local towns’ budgets.

Additionally, the allowance for credit losses calculation includes adjustments for qualitative risk factors that are likely to cause estimated credit losses to differ from historical experience. These qualitative adjustments may increase or reduce reserve levels and include adjustments for lending management experience and risk tolerance, loan review and audit results, asset quality and portfolio trends, loan portfolio growth, industry concentrations, trends in underlying collateral, external factors and economic conditions not already captured.

Loans that do not share risk characteristics are evaluated on an individual basis. When management determines that foreclosure is probable and the borrower is experiencing financial difficulty, the expected credit losses are based on the fair value of collateral at the reporting date adjusted for selling costs as appropriate.

Allowance for Credit Losses – Unfunded Commitments

Financial instruments include off-balance sheet credit instruments, such as commitments to make loans and commercial letters of credit issued to meet customer financing needs. The Company’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for off-balance sheet loan commitments is represented by the contractual amount of those instruments. Such financial instruments are recorded when they are funded.

The Company records an allowance for credit losses on off-balance sheet credit exposures, unless the commitments to extend credit are unconditionally cancelable, through a charge to provision for credit losses in the Company’s consolidated statements of income. The allowance for credit losses on off-balance sheet credit exposures is estimated by loan segment at each balance sheet date under the current expected credit loss model using the same methodologies as portfolio loans, taking into consideration the likelihood that funding will occur as well as any third-party guarantees. The allowance for unfunded commitments is included in other liabilities on the Company’s consolidated balance sheets.

Earnings per Share

Basic earnings per share (“EPS”) is computed by dividing net income available to common shareholders by the weighted average number of common shares outstanding. Nonvested restricted shares are included in the computation of basic earnings per share as the holder is entitled to full shareholder benefits during the vesting period, including voting rights and sharing in nonforfeitable dividends. Diluted earnings per share includes all convertible securities, such as convertible preferred stock, convertible debt, equity options, and warrants. The Company does not have any convertible securities that would dilute earnings per share.

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Recent Accounting Pronouncements

Accounting Standards Pending Adoption:

In November 2024, the Financial Accounting Standards Board (FASB) issued ASU 2024-03, “Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses.” ASU 2024-03 requires public companies to disclose, in the notes to the financial statements, specific information about certain costs and expenses at each interim and annual reporting period. This includes disclosing amounts related to employee compensation, depreciation, and intangible asset amortization. In addition, public companies will need to provide qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively. The FASB subsequently issued ASU 2025-01, “Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date”, which amends the effective date of ASU 2024-03 to clarify that all public business entities are required to adopt the guidance in ASU 2024-03 in annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. Early adoption of ASU 2024-03 is permitted. Implementation of ASU 2024-03 may be applied prospectively or retrospectively. The Company does not expect these amendments to have a material effect on its financial statements.

In October 2023, the FASB issued ASU 2023-06, “Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative.” This ASU incorporates certain U.S. Securities and Exchange Commission (SEC) disclosure requirements into the FASB Accounting Standards Codification. The amendments in the ASU are expected to clarify or improve disclosure and presentation requirements of a variety of Codification Topics, allow users to more easily compare entities subject to the SEC’s existing disclosures with those entities that were not previously subject to the requirements, and align the requirements in the Codification with the SEC’s regulations. For entities subject to the SEC’s existing disclosure requirements and for entities required to file or furnish financial statements with or to the SEC in preparation for the sale of or for purposes of issuing securities that are not subject to contractual restrictions on transfer, the effective date for each amendment will be the date on which the SEC removes that related disclosure from its rules. For all other entities, the amendments will be effective two years later. However, if by June 30, 2027, the SEC has not removed the related disclosure from its regulations, the amendments will be removed from the Codification and not become effective for any entity. The Company does not expect the adoption of ASU 2023-06 to have a material impact on its consolidated financial statements.

Other accounting standards that have been issued or proposed 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.

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NOTE 2 SECURITIES

The amortized cost and estimated fair value of securities available for sale, along with gross unrealized gains and losses are summarized as follows (dollars in thousands):

June 30, 2025	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
U. S. Treasuries	$	15,081	$	-	$	1,050	$	14,031
U. S. Government agencies		57,996		-		3,907		54,089
Municipal securities		40,898		-		2,626		38,272
Mortgage-backed securities		224,751		326		20,630		204,447
Corporate debt securities		30,550		-		1,368		29,182
Total Securities Available for Sale	$	369,276	$	326	$	29,581	$	340,021

December 31, 2024	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
U. S. Treasuries	$	20,072	$	-	$	1,458	$	18,614
U. S. Government agencies		72,995				5,270		67,725
Municipal securities		40,674		-		2,467		38,207
Mortgage-backed securities		198,591		158		23,800		174,949
Corporate debt securities		30,550		-		2,375		28,175
Total Securities Available for Sale	$	362,882	$	158	$	35,370	$	327,670

The amortized cost and fair value of securities at June 30, 2025, by contractual maturity are shown below (dollars in thousands). 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 Available for Sale
	Amortized		Fair
	Cost		Value
Due in one year or less	$	18,864	$	18,657
Due after one year through five years		95,269		90,625
Due after five years		72,077		67,416
Due after ten years		183,066		163,323
Total	$	369,276	$	340,021

There were no sales of securities available for sale in the first or second quarters of 2025 or 2024.

The following tables show the present fair value and gross unrealized losses (dollars in thousands), aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, as of the dates stated. The reference point for determining when securities are in an unrealized loss position is period-end; therefore, it is possible that a security’s market value exceeded its amortized cost on other days during the past twelve-month period. Excluded from the tables below were securities whose amortized cost equaled their fair value or were in an unrealized gain position as of the dates stated totaling $47.1 million and $9.0 million, as of June 30, 2025 and December 31, 2024, respectively.

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	Less than 12 Months				More than 12 Months				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
June 30, 2025
U. S. Treasuries	$	-	$	-	$	14,031	$	1,050	$	14,031	$	1,050
U. S. Government agencies		-		-		54,089		3,907		54,089		3,907
Municipal securities		8,813		405		28,243		2,221		37,056		2,626
Mortgage-backed securities		39,576		344		119,004		20,286		158,580		20,630
Corporate debt securities		998		2		28,184		1,366		29,182		1,368
Total Securities Available for Sale	$	49,387	$	751	$	243,551	$	28,830	$	292,938	$	29,581

	Less than 12 Months				More than 12 Months				Total
December 31, 2024	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
U. S. Treasuries	$	-	$	-	$	18,614	$	1,458	$	18,614	$	1,458
U. S. Government agencies		-		-		67,725		5,270		67,725		5,270
Municipal securities		9,971		139		28,236		2,328		38,207		2,467
Mortgage-backed securities		39,461		603		126,470		23,197		165,931		23,800
Corporate debt securities		1,463		37		26,712		2,338		28,175		2,375
Total Securities Available for Sale	$	50,895	$	779	$	267,757	$	34,591	$	318,652	$	35,370

At June 30, 2025 and December 31, 2024, the majority of securities in an unrealized loss position were of investment grade; however, a portion of the portfolio does not have a third-party investment grade available (securities with fair values of $24.6 million and $23.7 million at June 30, 2025 and December 31, 2024, respectively). These securities were primarily subordinated debt instruments issued by bank holding companies and are classified as corporate debt securities in the tables above. The Company evaluated the issuers of these individually, observing that each issuer had strong capital ratios and profitability, thereby indicating limited exposure to asset quality or liquidity issues and resulted in no identifiable credit losses. Contractual cash flows for mortgage-backed securities and U.S. Treasury and agencies are guaranteed and/or funded by the U.S. government and government agencies. State and municipal securities showed no indication that the contractual cash flows would not be received when due. The Company does not intend to sell, nor does it believe that it will be required to sell, any of its impaired securities prior to the recovery of the amortized cost. As of June 30, 2025 and December 31, 2024, there was no allowance for credit losses ("ACL") for the Company's securities AFS portfolio. Any impairment that has not been recorded through an ACL is recognized in accumulated other comprehensive income (loss).

The Company had securities with a market value of $119.2 million pledged to the Federal Reserve Discount Window as of June 30, 2025. The Discount Window provides access to funding to help depository institutions manage their liquidity risks. The Bank did not borrow from the Discount Window during the first six months of 2025. Additionally, the Company had securities with a market value of $9.2 million pledged to the Federal Reserve Bank of Richmond as collateral for deposits of the Department of Justice U.S. Bankruptcy Trustee.

As of June 30, 2025, other investments consisted of restricted stock in the Federal Reserve Bank (“FRB”) (carrying basis of $1.1 million at June 30, 2025 and December 31, 2024), Federal Home Loan Bank (“FHLB”) (carrying basis of $925 thousand and $920 thousand at June 30, 2025 and December 31, 2024, respectively), in Farmer Mac stock (carrying basis of $4 thousand at June 30, 2025 and December 31, 2024), and in a correspondent bank (carrying value of $50 thousand at June 30, 2025 and December 31, 2024). Additionally, the Company has an equity investment in National Bankshares Inc. totaling $135 thousand at June 30, 2025 and December 31, 2024. Other investments are carried at cost.

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NOTE 3 LOANS AND CREDIT QUALITY

The following is a summary of the major categories of total loans outstanding at June, 2025 and December 31, 2024 (dollars in thousands):

	June 30, 2025			December 31, 2024
1-4 Family residential construction	$	26,173		$	25,102
Other construction, land development and land		38,807			58,208
Secured by farmland		105,235			86,016
Home equity – open end		51,364			49,542
Real estate		228,374			213,081
Home equity – closed end		6,496			6,137
Multifamily		11,185			10,804
Owner-occupied commercial real estate		94,021			86,169
Other commercial real estate		104,415			98,189
Agricultural loans		16,844			17,928
Commercial and industrial		58,703			64,901
Credit cards		3,295			3,524
Automobile loans		90,016			104,271
Other consumer loans		9,839			11,915
Municipal loans		4,548			4,901
Gross loans		849,315			840,688
Unamortized net deferred loan fees		(542	)		(739	)
Less allowance for credit losses		8,312			8,129
Net loans	$	840,461		$	831,820

The table above does not include loans held for sale of $2.3 million at both June 30, 2025 and December 31, 2024. Loans held for sale consist of single-family residential real estate loans originated for sale in the secondary market.

Accrued interest receivable on loans held for investment totaled $3.6 million and $3.5 million at June 30, 2025 and December 31, 2024, respectively. For the quarters and six months ended June 30, 2025 and 2024, accrued interest receivable write-offs were not material to the Company’s consolidated financial statements.

The Company had loans held for investment pledged as collateral for borrowings with the FHLB totaling $324.7 million and $306.7 million as of June 30, 2025, and December 31, 2024, respectively. The Company maintains a blanket lien on certain loans in its residential real estate, commercial, agricultural farmland, and home equity portfolios.

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Nonaccrual and Past Due Loans

The following tables present the aging of the recorded investment of loans held for investment by loan category as of the dates stated (dollars in thousands).

June 30, 2025
	Accruing Loans 30-59 Days Past due		Accruing Loans 60-89 Days Past due		Accruing Loans 90 Days or More Past due		Nonaccrual Loans		Accruing Current Loans			Total Loans
1-4 Family residential construction	$	-	$	-	$	-	$	-	$	26,173		$	26,173
Other construction, land development and land		158		-		-		13		38,636			38,807
Secured by farmland		-		114		-		1,188		103,933			105,235
Home equity – open end		176				-		516		50,672			51,364
Real estate		1,278		342		-		2,129		224,625			228,374
Home equity – closed end		32		-		-		-		6,464			6,496
Multifamily		-		-		-		-		11,185			11,185
Owner-occupied commercial real estate		304		1,172		-		2,529		90,016			94,021
Other commercial real estate		-		-		-		-		104,415			104,415
Agricultural loans		-		-		-		283		16,561			16,844
Commercial and industrial		29		330		-		452		57,892			58,703
Credit cards		38		8		16		-		3,233			3,295
Automobile loans		2,020		441		-		489		87,066			90,016
Other consumer loans		102		10		-		41		9,686			9,839
Municipal loans		-		-		-		-		4,548			4,548
Gross loans		4,137		2,417		16		7,640		835,105			849,315
Less: Unamortized net deferred loan fees		-		-		-		-		(542	)		(542	)
Total	$	4,137	$	2,417	$	16	$	7,640	$	834,563		$	848,773

December 31, 2024
	Accruing Loans 30-59 Days Past due		Accruing Loans 60-89 Days Past due		Accruing Loans 90 Days or More Past due		Nonaccrual Loans		Accruing Current Loans			Total Loans
1-4 Family residential construction	$	-	$	-	$	-	$	-	$	25,102		$	25,102
Other construction, land development and land		-		10		-		14		58,184			58,208
Secured by farmland		-		-		-		53		85,963			86,016
Home equity – open end		130		-		-		501		48,911			49,542
Real estate		1,799		877		-		916		209,489			213,081
Home equity – closed end		-		-		-		-		6,137			6,137
Multifamily		-		-		-		-		10,804			10,804
Owner-occupied commercial real estate		124		-		-		3,416		82,629			86,169
Other commercial real estate		-		-		-		785		97,404			98,189
Agricultural loans		-		-		-		171		17,757			17,928
Commercial and industrial		849		46		-		768		63,238			64,901
Credit cards		41		19		32		-		3,432			3,524
Automobile loans		2,153		304		-		397		101,417			104,271
Other consumer loans		95		10		-		24		11,786			11,915
Municipal loans		-		-		-		-		4,901			4,901
Gross loans		5,191		1,266		32		7,045		827,154			840,688
Less: Unamortized net deferred loan fees		-		-		-		-		(739	)		(739	)
Total	$	5,191	$	1,266	$	32	$	7,045	$	826,415		$	839,949

There were $7.6 million and $7.0 million in nonaccrual loans at June 30, 2025 and December 31, 2024, respectively. There was no income recognized on nonaccrual loans during the three months or six months ended June 30, 2025 and 2024.

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The following table is a summary of the Company’s nonaccrual loans by major categories as of the dates stated (dollars in thousands).

	June 30, 2025						December 31, 2024
	Nonaccrual loans						Nonaccrual loans
	With no Allowance		With an Allowance		Total		With no Allowance		With an Allowance		Total
Other construction, land development and land	$	13	$	-	$	13	$	14	$	-	$	14
Secured by farmland		1,115		73		1,188		53		-		53
Home equity – open end		516		-		516		501		-		501
Real estate		2,102		27		2,129		916		-		916
Owner-occupied commercial real estate		2,495		34		2,529		2,147		1,269		3,416
Other commercial real estate		-		-		-		785		-		785
Agricultural loans		171		112		283		171		-		171
Commercial and industrial		54		398		452		768		-		768
Automobile loans		489		-		489		397		-		397
Other consumer loans		41		-		41		24		-		24
Total loans	$	6,996	$	644	$	7,640	$	5,776	$	1,269	$	7,045

Troubled Loan Modifications

The Company closely monitors the performance of borrowers experiencing financial difficulty and grants certain loan modifications it would not otherwise consider. The Company refers to such loan modifications as troubled loan modifications (“TLMs”). There were no loans modified for borrowers experiencing financial difficulty in the three months or six months ended June 30, 2025 or 2024.

The following tables present an aging analysis of the amortized cost of TLMs as of the dates stated (dollars in thousands).

	June 30, 2025
	Current Loans		30-89 Days Past Due		Greater than 90 Days Past Due & Accruing		Nonaccrual		Total
Real estate	$	-	$	-	$	-	$	5	$	5
Owner occupied commercial real estate		5,409		-		-		1,192		6,601
Automobile loans		36		-		-		11		47
Total modified loans	$	5,445	$	-	$	-	$	1,208	$	6,653

	December 31, 2024
	Current Loans		30-89 Days Past Due		Greater than 90 Days Past Due & Accruing		Nonaccrual		Total
Real estate	$	7	$	-	$	-	$	-	$	7
Owner occupied commercial real estate		6,653		-		-		-		6,653
Other commercial real estate		10		-		-		-		10
Automobile loans		62		49		-		-		111
Total modified loans	$	6,732	$	49	$	-	$	-	$	6,781

At June 30, 2025 and December 31, 2024, there were no unfunded commitments to borrowers with TLMs.

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The following table presents the amortized cost of TLMs modified in the preceding twelve months and had a payment default during the periods stated (dollars in thousands).

	For the three and six months ended June 30, 2025
	Number of Loans		Amortized Cost		% of Amortized Cost to Gross Loans by Category
Term extension and deferral
Real estate		1	$	5		0.01	%
Automobile loans		1		8		0.01	%
Total term extension and deferral		2	$	13

Other than temporary payment delay
Owner occupied commercial real estate		1	$	1,192		1.27	%
Total other than temporary payment delay		1	$	1,192

Total		3	$	1,205

There were no TLMs modified in the preceding twelve months that had a payment default during the three and six months ended June 30, 2024.

Collateral Dependent Disclosures

The collateral method is applied to individually evaluated loans for which foreclosure is probable. The collateral method is also applied to individually evaluated loans when borrowers are experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral. Collateral dependent loans are loans for which the repayment is expected to be provided substantially through the operation or sale of the collateral and the borrower is experiencing financial difficulty. These loans do not share common risk characteristics and are not included within the collectively evaluated loans for determining the allowance for credit losses. The Company has adopted the practical expedient to measure the allowance for credit losses based on the fair value of collateral. The allowance for credit losses is calculated on an individual loan basis based on the shortfall between the fair value of the loan's collateral, which is adjusted for liquidation costs/discounts, and amortized cost. If the fair value of the collateral exceeds the amortized cost, no allowance is required.

The following table presents an analysis of collateral-dependent loans of the Company as of the dates stated (dollars in thousands):

	June 30, 2025				December 31, 2024
	Real Estate		Business/Other Assets		Real Estate		Business/Other Assets
Secured by farmland	$	1,302	$	-	$	-	$	-
Home equity – open end		116
Real estate		1,029		-		-		-
Owner-occupied commercial real estate		2,405		-		3,416		-
Other commercial real estate		-		-		785		-
Agricultural loans		-		112
Commercial and industrial		-		398		-		605
Total loans	$	4,852	$	510	$	4,201	$	605

Credit Quality Indicators

The Company presents loan and lease portfolio segments and classes by credit quality indicator and vintage year. The Company defines the vintage date for the purpose of this disclosure as the date of the most recent credit decision. Renewals are categorized as new credit decisions and reflect the renewal date as the vintage date, except for renewals of loans modified for borrowers experiencing financial difficulty which are presented in the original vintage.

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Description of the Company’s credit quality indicators:

Pass: Loans in all classes that comprise the commercial and consumer portfolio segments that are not adversely rated, are contractually current as to principal and interest, and are otherwise in compliance with the contractual terms of the loan agreement. Management believes that there is a low likelihood of loss related to those loans that are considered pass.

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.

Credit cards are classified as pass or substandard. A credit card is substandard when payments of principal and interest are past due 90 days or more.

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The following table presents the Company’s recorded investment in loans by credit quality indicators by year of origination as of June 30, 2025 (dollars in thousands):

	Term Loans by Year of Origination
	2025		2024		2023		2022		2021		Prior		Revolving		Total
1-4 Family residential construction
Pass	$	-	$	-	$	778	$	-	$	-	$	-	$	25,395	$	26,173
Watch		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-
Total 1-4 Family residential construction		-		-		778		-		-		-		25,395		26,173
Current period gross write-offs		-		-		-		-		-		-		-		-

Other construction, land development and land
Pass		835		1,714		9,714		1,110		544		3,296		20,914		38,127
Watch		-		-		-		-		-		-		120		120
Substandard		-		-		-		-		-		13		547		560
Total Other construction, land development and land		835		1,714		9,714		1,110		544		3,309		21,581		38,807
Current period gross write-offs		-		-		-		-		-		9		-		9

Secured by farmland
Pass		10,469		5,873		11,242		13,186		15,039		35,904		9,662		101,375
Watch		-		154		-		1,667		-		737		-		2,558
Substandard		-		-		-		319		869		-		114		1,302
Total Secured by farmland		10,469		6,027		11,242		15,172		15,908		36,641		9,776		105,235
Current period gross write-offs		-		-		-		-		-		-		-		-

Home equity – open end
Pass		-		-		-		-		-		125		50,673		50,798
Watch		-		-		-		-		-		-		566		566
Substandard		-		-		-		-		-		-		-		-
Total Home equity - open end		-		-		-		-		-		125		51,239		51,364
Current period gross write-offs		-		-		-		-		-		-		-		-

Real estate
Pass		19,025		25,112		56,624		41,608		13,084		65,973		-		221,426
Watch		-		1,433		1,445		-		-		215		-		3,093
Substandard		-		-		295		230		805		2,525		-		3,855
Total Real estate		19,025		26,545		58,364		41,838		13,889		68,713		-		228,374
Current period gross write-offs		-		-		-		-		-		-		-		-

Home equity – closed end
Pass		579		695		2,407		203		81		2,531		-		6,496
Watch		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-
Total Home equity - closed end		579		695		2,407		203		81		2,531		-		6,496
Current period gross write-offs		-		-		-		-		-		-		-		-

Multifamily
Pass		-		2,703		-		2,597		1,280		2,362		2,243		11,185
Watch		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-
Total Multifamily		-		2,703		-		2,597		1,280		2,362		2,243		11,185
Current period gross write-offs		-		-		-		-		-		-		-		-

Owner-occupied commercial real estate
Pass		7,383		9,860		2,384		16,778		15,011		22,290		7,378		81,084
Watch		-		-		736		-		-		1,071		-		1,807
Substandard		-		1,158		-		-		-		9,924		48		11,130
Total Owner-occupied commercial real estate		7,383		11,018		3,120		16,778		15,011		33,285		7,426		94,021
Current period gross write-offs		-		-		-		-		-		-		-		-

Other commercial real estate
Pass		-		379		11,134		34,260		11,392		36,150		2,104		95,419
Watch		-		-		-		-		-		992		-		992
Substandard		-		7,919		-		-		-		85		-		8,004
Total Other commercial real estate		-		8,298		11,134		34,260		11,392		37,227		2,104		104,415
Current period gross write-offs		-		-		-		-		-		-		-		-

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	Term Loans by Year of Origination
	2025		2024		2023		2022		2021		Prior		Revolving		Total
Agricultural loans
Pass		2,646		2,139		1,691		1,331		217		109		7,982		16,115
Watch		409		-		-		13		-		24		-		446
Substandard		-		-		112		21		-		-		150		283
Total Agricultural loans		3,055		2,139		1,803		1,365		217		133		8,132		16,844
Current period gross write-offs		-		-		-		-		-		-		-		-

Commercial and industrial
Pass		9,243		13,776		3,571		5,872		2,962		691		19,876		55,991
Watch		-		-		-		52		-		-		1,150		1,202
Substandard		45		398		330		-		2		-		735		1,510
Total Commercial and industrial		9,288		14,174		3,901		5,924		2,964		691		21,761		58,703
Current period gross write-offs		-		11		-		74		-		-		-		85

Credit cards
Pass		-		-		-		-		-		-		3,279		3,279
Substandard		-		-		-		-		-		-		16		16
Total Credit cards		-		-		-		-		-		-		3,295		3,295
Current period gross write-offs		-		-		-		-		-		-		32		32

Automobile loans
Pass		8,971		21,830		30,285		19,118		7,303		1,949		-		89,456
Watch		-		-		-		-		-		-		-		-
Substandard		-		151		86		184		97		42		-		560
Total Automobile loans		8,971		21,981		30,371		19,302		7,400		1,991		-		90,016
Current period gross write-offs		11		393		315		300		66		48		-		1,133

Other consumer loans
Pass		1,502		2,854		2,334		1,758		581		419		350		9,798
Watch		-		-		-		-		-		-		-		-
Substandard		-		-		10		22		9		-		-		41
Total Other consumer loans		1,502		2,854		2,344		1,780		590		419		350		9,839
Current period gross write-offs		-		4		15		17		5		-		-		41

Municipal loans
Pass		-		-		-		-		551		3,997		-		4,548
Watch		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-
Total Municipal loans		-		-		-		-		551		3,997		-		4,548
Current period gross write-offs		-		-		-		-		-		-		-		-

Total loans	$	61,107	$	98,148	$	135,178	$	140,329	$	69,827	$	191,424	$	153,302		849,315
Less: Unamortized net deferred loan fees																(542	)
Loans held for investment															$	848,773

Current period gross write-offs	$	11	$	408	$	330	$	391	$	71	$	57	$	32	$	1,300

Table of Contents

The following table presents the Company’s recorded investment in loans by credit quality indicators by year of origination as of December 31, 2024 (dollars in thousands):

	Term Loans by Year of Origination
	2024		2023		2022		2021		2020		Prior		Revolving		Total
1-4 Family residential construction
Pass	$	-	$	1,224	$	-	$	-	$	-	$	92	$	23,786	$	25,102
Watch		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-
Total 1-4 Family residential construction		-		1,224		-		-		-		92		23,786		25,102

Other construction, land development and land
Pass		2,668		13,898		7,417		4,530		1,727		8,580		18,251		57,071
Watch		-		-		-		-		-		-		128		128
Substandard		-		-		-		-		-		525		484		1,009
Total Other construction, land development and land		2,668		13,898		7,417		4,530		1,727		9,105		18,863		58,208

Secured by farmland
Pass		5,462		10,038		13,283		12,908		25,209		8,413		8,074		83,387
Watch		155		-		1,667		-		-		754		-		2,576
Substandard		-		-		-		-		-		53		-		53
Total Secured by farmland		5,617		10,038		14,950		12,908		25,209		9,220		8,074		86,016

Home equity – open end
Pass		-		-		-		-		-		153		48,589		48,742
Watch		-		-		-		-		-		-		249		249
Substandard		-		-		-		-		-		-		551		551
Total Home equity - open end		-		-		-		-		-		153		49,389		49,542

Real estate
Pass		21,150		59,160		43,895		13,643		11,595		59,013		1,671		210,127
Watch		-		-		-		-		-		-		-		-
Substandard		-		203		86		528		-		2,137		-		2,954
Total Real estate		21,150		59,363		43,981		14,171		11,595		61,150		1,671		213,081

Home equity – closed end
Pass		727		2,469		252		87		786		1,816		-		6,137
Watch		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-
Total Home equity - closed end		727		2,469		252		87		786		1,816		-		6,137

Multifamily
Pass		2,130		-		4,854		1,368		866		1,586		-		10,804
Watch		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-
Total Multifamily		2,130		-		4,854		1,368		866		1,586		-		10,804

Owner-occupied commercial real estate
Pass		7,187		2,207		17,127		15,754		6,697		19,933		5,042		73,947
Watch		1,165		-		-		-

F&M BANK CORP 10-Q