CORRESP 1 filename1.htm fmbm_corresp.htm
October 30, 2014
 
Securities and Exchange Commission
Division of Corporate Finance
Washington, D.C.  20549

Dear Mr. Rodriguez:

We have received your comment letter dated October 17, 2014 and have provided responses below.

1.  
Please provide us and expand the tabular presentation in future filings to include the information for nonaccrual, past due and restructured loans for each of the last 5 fiscal years pursuant to Item III C 1 of Guide III.  In this regard, present the aggregate amount of loans not included above which are “troubled debt restructurings.”  In addition, provide a note to the tabular presentation to state the amount of nonaccrual troubled debt restructurings included in nonaccrual loans.

In future filings, we will include the following table to address this comment.

(Dollars in thousands)
 
2013
   
2012
   
2011
   
2010
   
2009
 
Nonaccrual Loans:
                             
    Real Estate
  $ 9,963     $ 9,611     $ 7,671     $ 5,189     $ 2,995  
    Commercial
    1,890       2,914       5,888       1,656       261  
    Home Equity
    402       740       266       715       250  
    Other
    -       121       39       30       0  
Loans past due 90 days or more:
                                       
     Real Estate
    246       -       646       3021       3475  
    Commercial
    4       -       -       4581       57  
    Home Equity
    61               260       588       375  
    Other
    16       -       6       54       240  
Restructured Loans:
                                       
Real Estate
    50       147       4,786       267          
Commercial
    1,450       4,628       1,292       385          
Total Nonperforming loans
  $ 14,082     $ 18,161     $ 20,854     $ 16,486     $ 7,653  
Nonperforming loans as a percentage of loans held for investment
    2.94 %     3.89 %     4.18 %     3.70 %     1.76 %
Net Loan Losses to Total Loans Held for Investment(1)
    0.78 %     0.64 %     0.63 %     0.53 %     0.59 %
Allowance for loan and lease losses to nonperforming loans
    58.12 %     44.90 %     33.26 %     35.10 %     50.12 %
Restructured Nonaccrual
    -       -       1,349       -       -  
 
 
1

 
 
2.  
Please provide us and expand future filings to include the ratio of net charge offs during the period to average loans outstanding during the period pursuant to Item IV A of Guide III.

We will expand future filings to include the following table to explain the ratio of net charge offs during the period to average loans outstanding.
 
SUMMARY OF ACTIVITY IN THE ALLOWANCE FOR LOAN LOSSES
(Dollars in thousands)
 
2013
   
2012
   
2011
   
2010
   
2009
 
Balance at beginning of period
    8,154       6,937       5,786       3,836       2,189  
Provision charged to expenses
    3,775       4,200       4,000       4,300       4,210  
Loan losses:
                                       
     Construction/land development
    2,127       1,480       1,263       249       677  
     Farmland
    -       -       -       3       -  
     Real Estate
    173       482       474       181       267  
     Multi-family
    -       -       -       958       -  
     Commercial Real Estate
    201       424       381       346       395  
     Home Equity – closed end
    159       69       222       200       16  
     Home Equity – open end
    68       -       83       -       -  
Commercial & Industrial – Non Real Estate
    986       776       423       332       1,096  
     Consumer
    173       45       90       117       117  
     Dealer Finance
    17       -       -       -       -  
     Credit Cards
    121       71       106       97       71  
Total loan losses
    4,025       3,347       3,042       2,483       2,639  
Recoveries:
                                       
     Construction/land development
    40       192       -       -       -  
     Farmland
    -       3       -       -       -  
     Real Estate
    -       -       8       2       6  
     Multi-family
    -       -       48       52       -  
     Commercial Real Estate
    42       48       16       2       -  
     Home Equity – closed end
    -       -       3       -       -  
     Home Equity – open end
    29       -       27       -       -  
     Commercial & Industrial – Non Real Estate
    127       62       24       -       -  
     Consumer
    14       27       42       56       36  
     Dealer Finance
    -       -       -       -       -  
     Credit Cards
    28       32       25       21       34  
Total recoveries
    280       364       193       133       76  
Net loan losses
    (3,745 )     (2,983 )     (2,849 )     (2,350 )     (2,563 )
Balance at end of period
    8,184       8,154       6,937       5,786       3,836  
Allowance for loan losses as a percentage of loans
    1.71 %     1.75 %     1.54 %     1.30 %     0.88 %
Net loan losses to average loans outstanding (held for investment)
    0.79 %     0.65 %     0.63 %     0.53 %     0.61 %
 
 
2

 
 
3.  
Please provide us and expand future filings to present the Allocation of the Allowance for Loan Losses at the end of each of the last five fiscal years pursuant to Item IV B of Guide III.

ALLOCATION OF THE ALLOWANCE FOR LOAN LOSSES
 
    2013     2012     2011*     2010*     2009*/**  
Allowance for loan losses:
(in thousands)
 
BALANCE
   
PERCENTAGE OF LOANS IN EACH CATEGORY
   
BALANCE
   
PERCENTAGE OF LOANS IN EACH CATEGORY
   
BALANCE
   
PERCENTAGE OF LOANS IN EACH CATEGORY
   
BALANCE
   
PERCENTAGE OF LOANS IN EACH CATEGORY
   
BALANCE
   
PERCENTAGE OF LOANS IN EACH CATEGORY
 
                                                                   
                                                                   
Construction/Land Development
    4,007       48.96 %     2,771       33.98 %                                          
Real Estate
    400       4.89 %     924       11.33 %                                          
                                                                           
Real Estate
    4,407       53.85 %     3,695       45.32 %     2,735       39.43 %     2,284       39.48 %     1,878       48.96 %
                                                                                 
Commercial, Financial and Agricultural
    2,239       27.36 %     3,187       39.09 %     2,984       43.02 %     2,653       45.86 %     1,746       45.52 %
                                                                                 
Consumer
    905       11.06 %     253       3.10 %     298       4.30 %     270       4.67 %     212       5.53 %
                                                                                 
Home Equity
    633       7.73 %     1,019       12.50 %     920       13.26 %     578       9.99 %     -       0.00 %
                                                                                 
Total
  $ 8,184       100.00 %   $ 8,154       100.00 %   $ 6,937       100.00 %   $ 5,785       100.00 %   $ 3,836       100.00 %
 
* Construction/Land Development ALLL was included with Real Estate.
   
** Home Equity ALLL was included with Real Estate.
 
 
4.  
We note that all the signatures are dated March 28, 2013.  Please file an amendment to the Form 10-K to include currently dated signatures.

Response:  We will file an amended Form 10-K as required with the currently dated signatures.

5.  
We note that Exhibits 31.1, 31.2 and 32.1 are dated March 31, 2013.  Please file newly dated certifications in an amendment to the Form 10-K.

Response: We will file amendment to Form 10-K Exhibits 31.1, 31.2 and 32.1 with currently dated signatures.

In our responses we acknowledge that,
 
  
The company is responsible for the adequacy and accuracy of the disclosure in the filing;
  
Staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action with respect to the filing; and
  
The company may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.
 
    Sincerely,  
       
    /s/ Carrie A. Comer  
    Carrie A. Comer
    Senior Vice President and Chief Financial Officer
       
 
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