Dear Clients:Our Bank has continued solid growth throughout the first half of 2014. Total loans have grown approximately 5% while maintaining our high asset quality. Earnings are running about 6% above 2013 figures which contribute to the Bank’s foundation of core capital and reserves accumulated over time. The entire team and board members are very proud of the sound and solid growth we have experienced and plan to continue this for years to come.

The F & M Bank team has been instrumental to our dramatic growth. At a recent Manchester Advisory Board Meeting, a board member shared a recent memorable customer service experience delivered by a member of our team. Those extra-ordinary experiences make a difference to our clients, our team and the overall success of our Bank.

Making a difference in our communities is a priority of the Bank – here are some examples of our involvement over the past year:

• Eighteen team members taught a variety of Junior Achievement classes

• Eight team members taught 11 “Teach Children to Save” classes

• Five team members were involved with teaching Financial Literacy courses

• Eleven team members raised a total of over $10,000 for Big Brothers Big Sisters & Helping Services for Northeast Iowa-Mentoring Connection for Delaware County

• The Manchester and Anamosa teams coordinated the ACT Prep Classes for their local high school students.

Our Information Technology team recently presented Information Security Training “Lunch & Learn” programs to our business clients in our St. Paul Metro and Cedar Rapids markets. These sessions were well received by our clients and covered current threats including Corporate Account Takeovers and best practices to avoid problems. We are looking forward to offering more programs at other locations.

We have launched our new website at www.fmbank.biz. It has a fresh new look and user-friendly navigation.While the desktop version of the site is one that most will see, this new site can adapt to mobile devices like iPhones, iPads, Android phones, etc... Our new site is “responsive” and will adapt to whatever screen, making your visit more enjoyable regardless of the device you’re using.

F & M’s newest location in Monticello opened its doors on February 3rd and we have been warmly welcomed by the area. We have had a good number of people come in and open accounts along with excellent commercial and ag loan growth.

Thank you to everyone for their contribution to the growth of F & M Bank. You, our valued clients, help us promote our bank as the “Right Choice”; as well as our dedicated employees, who strive hard every day to deliver quality products and services to accomplish our goal to “Exceed Our Client’s Expectations.”

We wish all of you a safe and prosperous Summer!

Best regards,

Michael W. Dunn, President and CEO

InsideArtist in All of Us. . . 2Teach Children to Save . . . . . . . . . . . 2ID Theft Seminar . . . 2Coming in 2015 . . . . 2Have Lunch With Us . . . . . . . . . . 2Blue Heron Days . . . 2Refer a Friend . . . . . 3Relay for Life . . . . . . 3ID Theft Smart . . . . . 3Feed My Starving Children . . . . . . . . . . 3Home Loans . . . . . . . 3Business Showcases . . . . . . . . 4Congrats Mike . . . . . 4

www.fmbank.biz • e-mail: info@fmbank.biz

Manchester 101 E Main St 563-927-4475

Cedar Rapids 4000 1st Ave NE 319-366-8681

Cedar Rapids 200 1st St SW 319-366-4040

Anamosa 220 W Main St 319-462-6878

Monticello 111 E 1st St

319-465-9158

Lino Lakes, MN 7641 Lake Dr 651-784-8000

Vadnais Heights, MN 845 E County Rd E

651-429-8000

S U M M E R 2 0 1 4M I N N E S O T A

www.fmbank.biz • e-mail: info@fmbank.biz2

Have Lunch With UsTuesday, July 22

11:30 am - 1:00 pm

Theme: Fun in the Sun

F&M Bank7641 Lake Drive

Lino Lakes, MN 55014

An Artist in All of UsClients were given the opportunity to learn a brief history on Monet and learn instruction on techniques used, before we created our own rendition of this beautiful piece of art.

If you are interested in joining us for our next “Artist in All of Us” session, please contact Sue Peacock (651-784 8000).

ID Theft SeminarClients were given sound advice on how to spot fraud and how to deal with ID theft at a recent seminar held at our Lino Lakes branch. Julie Ward, Independent Associate, presented to a full crowd, along with a local police officer.

Coming in 2015!We are heading to:

Ireland in March Washington DC in September

Watch for Travel Show information coming in Fall 2014.

Teach Children to SaveF&M Bank team members visited two local elementary schools within the Centennial District this spring to teach 3rd – 5th graders the importance of money management as well as to offer guidance and strategies on saving money. Teach Children to Save was celebrated on April 11th this year.

Saturday, Aug. 169am – 1pm: Lino Lakes CERT

Community Blood Drive – held at F&M Bank Parking lot, Lino Lakes

Noon – 4pm: Visit the F&M Team at the Quad Chamber of Commerce

“Commerce and Crafts” Business Expo

Visit http//www.blueherondays.org for a full list of activities and events.

We look forward to seeing you there!!

3www.fmbank.biz • e-mail: info@fmbank.biz

F&M Bank and Kroll Fraud Solutions, the leading provider of identity theft and fraud investigation services, have partnered together to introduce ID TheftSmart™ to you.

If you would like more information on how you can add the security and protection of the ID TheftSmart™ program, please call F&M Bank at 800-391-2265 or email us at ebanking@fmbankia.com.

Would you like to have a friend join you on one of our trips? Do you know someone who would benefit from the friendly and helpful service F&M Bank offers? We want to thank you in a special way for being part of our Regency Club and for referring your friends to us. When a qualifying account is opened, you will receive a $25.00 Regency/F&M Bank gift certificate to use towards one of our events or trips. Fill out the form below. Please contact Sue Peacock at 651-784-8000. Thank you for your banking relationship with F&M Bank.

New Client’s Name: __________________________________________________

Referring Client’s Name: ______________________________________________

Referring Client’s Address: ____________________________________________

Referring Client’s Phone: ______________________________________________

For more information or to print a referral card, please visit fmbankia.bizTo receive this offer, the referring friend must be a current client of Farmers and Merchants Savings Bank, and the above form must be present at time of opening an account. When the referred friend opens a Certificate of Deposit for greater than $10,000 or a new checking account (minimum $2,500), you will receive an F&M Bank $25.00 gift certificate 60 days after the account opening. Your accounts must be in good standing within 60 days of opening in order to receive this offer. This offer is not valid with any other promotional offer. All terms subject to change without notice. Loan/account opening subject to credit approval. Member FDIC. Equal Housing Member

Refer a friend today!

ARE YOU LOOKING TO BUY, BUILD, REFINANCE OR IMPROVE YOUR HOME?MAKE “THE RIGHT CHOICE” AND START WITH F&M BANK!For more details contact:

Jenna JuettenNMLO #1145486Phone: 763-957-4247Email: jjuetten@fmbank.biz

Feed My Starving ChildrenIn March, F&M Team members visited Feed My Starving Children for the second year running.

Meals packed numbered 28,728. This feeds 79 children for a year and equates to 133 boxes filled. For more information on this worthwhile organization please visit www.fmsc.org.

Relay for Life 2014 - July 25F&M Bank will be present at the White Bear Relay for Life.

“In Memory” or “In Honor” luminaries are available at both Vadnais Heights and Lino Lakes Branches with a suggested donation of $10/bag. All donations go towards White Bear Relay for Life which support our local Five-State area. These funds support all areas of care needs for those battling all types of cancer. If you are interested in participating in the “Survivors Walk” or joining us for the Opening Ceremony, please contact Susie Johnson for more details (651-429-8000).

101 E Main St, Manchester, IA 52057 220 W Main St, Anamosa, IA 52205 4000 1st Ave NE, Cedar Rapids, IA 52402 200 1st St SW, Cedar Rapids, IA 52404111 E 1st St, Monticello, IA 52310 7641 Lake Dr, Lino Lakes, MN 55014 845 E County Rd E, Vadnais Heights, MN 55127

PRSRT STDU.S. Postage

PAIDPermit No. 54Belmond, IA

250,000

www.printingservicesinc.net

Each month at our Minnesota offices, commercial clients are chosen to participate in our Business Showcase for the month. We recognize these businesses with dedicated space in the lobby to showcase their respective business and display their name on our marquee for the entire month.

Recent particpants include: Hoff Diamonds; Shoreview Area Housing Initiative (SAHI); Hampton Inn (Lino Lakes); Roger Scheunemann CPA (not pictured).

HOFF DIAMONDS

SAHI

HAMPTON INN