The federal tax-cut legislation Republicans passed in December will save F&M Corp. (OTCQX: FMBM) a lot of money, and its board of directors has decided to share some of that windfall with the three important parts of its operation — the community, its employees and its shareholders.
Neil Hayslett, executive vice president and chief administrative officer of the Timberville company, said the bank is sharing its wealth by creating funds to issue grants to nonprofits in the three communities it serves, issuing employee bonuses and providing a one-time special dividend for shareholders.
He said the total amount allocated through the three initiatives is about $1.1 million, a number linked to the bank’s 110th anniversary.
“We’re sharing,” he said, “with our communities, our shareholders and our employees.”
The announcements, made Monday at a companywide event held at Harrisonburg First Church of the Nazarene, are the first touted publicly by a local company as being linked to savings from the Tax Cuts and Jobs Act.
F&M will provide $150,000 to start donor-advised funds through The Community Foundation of Harrisonburg and Rockingham County and $50,000 each to start funds with the Shenandoah Community Foundation, which serves Shenandoah County, and the Community Foundation of the Central Blue Ridge, which covers Augusta County, Staunton and Waynesboro, among other localities.
Hayslett said F&M will make requests for gifts from the fund to be made to various community organizations. The company plans to make annual contributions to the fund.
“Hopefully there will be more that goes in than goes out,” he said, “so that, over time, we’re building something of an endowment.”
Saving $1.6M To $1.7M
F&M’s funds, Hayslett said, will operate in addition to the charitable donations the company makes to community groups.
“This was meant to supplement, not supplant,” he said. “If there is a large capital campaign for some project, we have set aside some money to participate at a level in excess of what we normally would.”
Bank officials will make decisions on allocations from the fund, said Hayslett.
For years, he said, F&M’s leaders have considered establishing a separate foundation for the company. But they decided a setting up a fund through the community foundations would accomplish the same goal with far less cost and legal work.
“This was the perfect opportunity to leverage these foundations that exist in these localities,” said Hayslett. “They specialize in handling these grants efficiently and properly, so that makes it a little easier for us.
F&M’s board approved the initiative several weeks ago, he said, but the bank waited until its annual all-employee gathering when banks were closed for Presidents’ Day to announce it along with the bonus and dividend plans.
Hayslett said F&M will pay bonuses to all non-executive staff members. Those who work less than 30 hours a week will receive $750, while those working 30 or more will receive $1,100 — another nod to the company’s anniversary.
“It’s our 110th year,” he told the employees Monday, “and we’re going to throw on an extra zero.”
F&M is the parent company of Farmers & Merchants Bank, VBS Mortgage and VSTitle. The bonus program covers employees of all three companies,
“Certainly our success all these years as a community bank is based on our staff,” said Hayslett. “They’re professional, they’re friendly and they’re truly part of the communities they serve.”
The bonus payouts will total more than $200,000, he said.
Finally, F&M will provide its shareholders a special dividend of 20 cents a share over and above its regularly quarterly dividends. The dividend is payable on March 14 to shareholder of record as of Feb. 28.
F&M Corp. has approximately 3.2 million shares outstanding, Hayslett said, so the dividend is expected to cost $650,000.
Much of that money will wind up in local pockets, as he estimated that 70 percent of F&M’s stock is held by area residents. Employees will benefit, too, because about 6 percent of the stock is held by the Employee Stock Ownership Plan. The ESOP is the company’s largest shareholder.
The company has been expanding steadily in recent years, and Hayslett said it has the capital necessary to fund its growth plans. Based on last year’s performance, F&M would expect to save $1.6 million to $1.7 million annually because of the tax cut.