F&M Bank, of Spokane Valley, put its profits back on a growth track last year, recovering from a dip in 2004 that had ended a run of seven straight years of record earnings.


The bank posted net income of $3.2 million for 2005, up 23 percent from $2.6 million the previous year, but still well below the $4.4 million in net income it had reported in 2003. It also rebounded in its return on average assets, to 0.92 percent last year from 0.82 percent in 2004, and in its return on average equity, to 8.73 percent from 7.84 percent. Both ratios are considered measures of a banks performance.


F&M posted strong across-the-board gains in loans, deposits, and assets as well. Its loans grew 15.8 percent, to $309.9 million, last year, up from $267.5 million in 2004. Meanwhile, its deposits climbed 6.5 percent, to $303.9 million, and its assets grew 11 percent, to $361 million, both as of Dec. 31.


We had good growth in commercial real estatecommercial and industrialand a good year for loan-fee income, says John Wagner, the banks president. Some restructuring in mid-2005 also contributed to the improved performance, he says.


This year, the bank might be just a little less on earnings growth, but still in excess of 20 percent, and loan growth should be on par with this year, Wagner says.


The bank has the equivalent of just under 140 full-time employees, which is about the same as it had at the end of last year, and operates 16 branches, located in Spokane, Spokane Valley, Cheney, Liberty Lake, and Rockford, Wash.


Six of those branches are located inside Safeway Inc., Tidymans LLC, or Albertsons Inc. supermarkets. The bank recently moved one of its branches to an Albertsons-anchored retail center at 8901 E. Trent, in Millwood, after Tidymans decided to close its store on Argonne in which that branch had operated for eight years.


Farmers & Merchants doesnt have any definite plans at present to open additional branches, and will focus this year on building up business through its current branch network, Wagner says.


Contact Kim Crompton at (509) 344-1263 or via e-mail at kimc@spokanejournal.com.