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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For six months ended June 30, 1996
Commission file number 014492
FARMERS & MERCHANTS BANCORP, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Ohio 34-1469491
- ------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
307-11 North Defiance Street 43502
- ------------------------------- ------------------------------------
(Address of principal executive (Zip Code)
offices)
Registrant's Telephone Number, including area code 419/446-2501
------------
Not applicable
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Former name, former address, and former fiscal year, if changed
since last year
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 periods that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
Indicate the number of shares of each of the issuers classes of common stock,
as of the latest practicable date:
Class Outstanding as of June 30, 1996
- ------------------------------- ------------------------------------
Common Stock, No Par Value 1,300,000
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
FARMERS & MERCHANTS BANKCORP, INC.
INDEX
Form 10-Q Items Page #
- --------------- --------
PART I. FINANCIAL INFORMATION
Item 1. Financial statements (unaudited)
Condensed consolidated balance sheets-
June 30, 1996 and December 31, 1995 1
Condensed consolidated statements of net earnings-
six months ended June 30, 1996 and March 31, 1995 2
Condensed consolidated statements of cash flows-
six months ended June 30, 1996 and March 31, 1995 3
Notes to condensed financial statements 4
Item 2. Management's discussion and analysis of
Financial Condition and Results of Operations 5
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 6
SIGNATURES 7
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FARMERS & MERCHANTS BANCORP, INC.
ARCHBOLD, OHIO
CONDENSED CONSOLIDATED BALANCE SHEET
(in thousands of dollars)
<TABLE>
<CAPTION>
Quarter Ended Market Value Year Ended
June 30 June 30 December 31
ASSETS 1996 1996 1995
- -------- ------------- ------------ ------------
<S> <C> <C> <C>
Cash and due from banks $ 12,846 $ 14,951
Interest bearing deposits in other banks 145 100
Federal Funds Sold, & Securities Purchased
Under Agreement to Resell 10,620 10,710
Investment Securities
U.S. Treasury 27,880 22,719 22,757
U.S. Government Agencies 36,337 34,475 31,237
State & Political Subdivisions 25,047 21,464 19,926
All Others 13,941 10,777 10,795
Loans and leases 352,414 339,676
Bank premises and equipment 7,332 7,198
Accrued interest and other assets 7,075 6,740
----------------------------- --------
TOTAL ASSETS $493,637 $89,435 $464,090
- ------------ ============================= ========
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
LIABILITIES
- -----------
Deposits:
Demand $ 40,663 $ 37,436
Time and savings 393,873 366,554
Federal Funds Purchased & Securities Sold
Under Agreement to Repurchase 5,156 6,919
Other Borrowed Money 9,355 9,662
Accrued interest and other liabilities 3,685 3,898
----------------------------- --------
TOTAL LIABILITIES 452,732 0 424,469
- ----------------- ----------------------------- --------
SHAREHOLDERS' EQUITY
- --------------------
Common Stock, no par value - Authorized
300,000 shares; issued 260,000 shares
in 1993 & 1992 12,677 12,677
Undivided profits 28,228 26,944
----------------------------- --------
TOTAL SHAREHOLDERS' EQUITY 40,905 0 39,621
- -------------------------- ----------------------------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $493,637 $0 $464,090
- ------------------------------------------ ============================= ========
<CAPTION>
Market Value Quarter Ended
December 31 June 30
ASSETS 1995 1995
- -------- ------------- -------------
<S> <C> <C>
Cash and due from banks $ 12,757
Interest bearing deposits in other banks 145
Federal Funds Sold, & Securities Purchased
Under Agreement to Resell 4,505
Investment Securities
U.S. Treasury 22,757 20,886
U.S. Government Agencies 31,237 21,184
State & Political Subdivisions 19,926 17,862
All Others 10,795 7,091
Loans and leases 328,320
Bank premises and equipment 7,294
Accrued interest and other assets 6,929
------------------------------
TOTAL ASSETS $84,715 $426,973
- ------------ ==============================
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
LIABILITIES
- -----------
Deposits:
Demand $ 32,673
Time and savings 338,220
Federal Funds Purchased & Securities Sold
Under Agreement to Repurchase 6,053
Other Borrowed Money 9,650
Accrued interest and other liabilities 2,931
-----------------------------
TOTAL LIABILITIES 0 389,527
- ----------------- -----------------------------
SHAREHOLDERS' EQUITY
- --------------------
Common Stock, no par value - Authorized
300,000 shares; issued 260,000 shares
in 1993 & 1992 12,677
Undivided profits 24,769
-----------------------------
TOTAL SHAREHOLDERS' EQUITY 0 37,446
- -------------------------- -----------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $0 $426,973
- ------------------------------------------ =============================
</TABLE>
See notes to condensed consolidated unaudited financial statements
Note: The balance sheet at December 31, 1995 has been derived from the
audited financial statements of that date.
1
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FARMERS & MERCHANTS BANCORP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF NET EARNINGS
(In thousands of dollars)
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
June 30 June 30
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
INTEREST INCOME:
Loans and leases $15,741 $14,068 $7,770 $7,544
Investment Securities
U.S. Treasury 676 447 361 229
U.S. Gov't Agencies 1,032 754 536 325
States & Political Subdiv. 584 582 297 298
Other 307 258 148 122
Federal funds sold 301 126 134 55
Deposits with other banks 0 0 0 0
------- ------- ------ ------
Total Interest Income 18,641 16,235 9,246 8,573
------- ------- ------ ------
INTEREST EXPENSE:
Deposits 9,829 7,442 4,941 3,982
Short-term borrowings 170 197 80 81
Other borrowed money 302 332 150 153
------- ------ ------ ------
Total Interest Expense 10,301 7,971 5,171 4,216
------- ------ ------ ------
NET INTEREST INCOME 8,340 8,264 4,075 4,357
PROVISION FOR LOAN LOSSES 413 0 268 0
------- ------ ------ ------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 7,927 8,264 3,807 4,357
OTHER INCOME:
Service charges 533 496 274 268
Other 768 453 388 215
Securities gains (losses) 0 (29) 0 (17)
------- ------- ------ ------
1,301 920 662 466
------- ------- ------ ------
OTHER EXPENSE:
Salaries 2,398 1,910 1,195 972
Pension and Employee Benefits 465 405 233 230
Occupancy 617 559 268 278
Other operating 1,853 2,172 967 1,135
------- ------- ------ ------
5,333 5,046 2,663 2,615
------- ------- ------ ------
EARNINGS BEFORE INCOME TAX 3,895 4,138 1,806 2,208
PROVISION FOR FEDERAL
INCOME TAX 1,161 1,212 555 648
------- ------- ------ ------
NET EARNINGS $ 2,734 $ 2,926 $1,251 $1,560
======= ======= ====== ======
Net income per share (Based
upon the weighted average
number of shares outstanding
of 1,300,000 for
1996 and 1995) 2.10 2.25 0.96 1.20
======= ======= ====== ======
</TABLE>
See notes to condensed consolidated unaudited financial statements.
2
<PAGE> 5
Farmers and Merchants Bancorp, Inc.
<TABLE>
<CAPTION>
Cash Flows From Operating Activities Jun 30 Jun 30
(In Thousands) 1996 1995
<S> <C> <C>
Net Earnings 2,734 2,926
Adj To Reconcile Net Earnings to Cash
provided by Operating activities
Depreciation and Amortization 347 300
Premium Amortization 336 59
Discount Amortization (76) (429)
Provision for Loan Losses 413 0
Provision for Deferred Taxes 229 395
(Gain) Loss on Sale of Fixed Assets 0 0
(Gain) Loss on Sale of Securities 0 29
Changes in Assets and Liabilities
Accrued Int Receivable & Other Assets (106) (1,043)
Accrued Int Payable & Other Liabilities 111 258
Net Cash Provided By Operating Act 3,988 2,495
Cash Flows from Investing Activities
Capital Expenditures (480) (1,337)
Proceeds from Sale of Fixed Assets 0 0
Proceeds from Sale of Securities 0 0
Proceeds from Maturities of Securities 0 10,933
Purchase of Securities (18,749) 0
Net (Increase) Decrease in Loans (12,749) (26,721)
Net (Increase) Decrease in Leases 10 1
Net Cash Used by Investing Activities (31,968) (17,124)
Cash Flows from Financing Activities
Net Increase (Decrease) in Deposits 30,674 26,498
Net Increase (Decrease) in Short Term
Borrowings (1,762) (8,344)
Net Increase in Long Term Borrowings 0 0
Payments on Long Term Borrowings (307) (224)
Payments of Dividends (975) (780)
Unrealized Gains/Losses on Securities (800) 434
Net Cash Provided by Financing Act 26,830 17,584
Net Change in Cash & Cash Equivalents (1,150) 2,955
Cash & Cash Equivalents at Beginning of Year 24,761 14,452
Cash & Cash Equivalents at end of year 23,611 17,407
Reconcilements of Cash & Cash Equivalents
Cash and Due from Banks 12,846 12,757
Interest Bearing Deposits 145 145
Federal Funds Sold 10,620 4,505
Total Cash and Cash Equivalents 23,611 17,407
</TABLE>
3
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FARMERS & MERCHANTS STATE BANK
Notes to Condensed Consolidated Financial Statements
NOTE 1. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions
for Form 10-Q and Rule 10-1 of Regulation S-X. Accordingly, they do not
include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the
opinion of management, all adjustments, consisting of normal recurring
accruals, considered necessary for a fair presentation have been
included. Operating results for the six months ended June 30, 1996 are
not necessarily indicative of the results that are expected for the year
ended December 31, 1996. For further information, refer to the
consolidated financial statements and footnotes thereto included in the
Company's annual report on Form 10-K for the year ended December 31,
1995.
4
<PAGE> 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITIONS AND RESULTS OF OPERATIONS
Farmers & Merchants Bancorp, Inc., was incorporated on February 25, 1985, under
the laws of the State of Ohio. Farmers and Merchants Bancorp, Inc., and its
subsidiary. The Farmers & Merchants State Bank are engaged only in commercial
banking. The executive offices of Farmers & Merchants Bancorp, Inc., are located
at 307-11 North Defiance Street, Archbold, Ohio 43502.
LIQUIDITY AND CAPITAL RESOURCES
Liquidity has continued to be enhanced by the generation of cash through
operations primarily by reduction in expenses, and the collection of interest
income from productive assets.
The rate of increase on Capital Expenditures has slowed with the completion of
the renovation of the main office and the implementation of the new proof
system. There will be reasonable increase in this area due to the major
renovation of one of the branch offices.
The following is a list of 5 capital ratios as they are calculated from the
June 30, 1996 financial statements.
Primary Ratio 9.30%
Total Capital Ratio 11.17%
Risk Based Capital Tier 1 8.03%
Risk Based Capital Tier 2 10.94%
Stockholders Equity/Total Assets 8.29%
During the first six months of 1996 the bank's loan portfolio has increased
$12,749,000. This represents a 4% increase. This was the primary use of cash
over the period. An increase of $30,674,000 in deposits was noted for the six
months ended June 30, 1996. This represents a 8% increase. This increase was
do in part to the fact that the bank offers very competitive rates for its
deposit products. In addition a concerted marketing effort has been implemented
to attract more "core" deposits to help with the maintaining of an acceptable
net interest margin.
5
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PART II
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) The following documents are filed as part of this Report:
Exhibit
No. Description
- ------- --------------------------------------
27 Financial Data Schedule
(B) Reports on Form 8-K
No reports on Form 8-K were filed by the Registrant during the quarter ended
June 30, 1996.
6
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SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
Farmers & Merchants Bancorp,
Date: August 1, 1996 By: /s/ Joe E. Crossgrove
-----------------------------
Joe E. Crossgrove
Executive Vice President
and Cashier
Date: August 1, 1996 By: /s/ Randal H. Schroeder
-----------------------------
Randal H. Schroeder
Asst. Vice President
and Chief Accounting Officer
7
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EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<S> <C>
27 Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 12,846
<INT-BEARING-DEPOSITS> 145
<FED-FUNDS-SOLD> 10,620
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 103,205
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 357,914
<ALLOWANCE> 5,500
<TOTAL-ASSETS> 493,637
<DEPOSITS> 434,536
<SHORT-TERM> 5,156
<LIABILITIES-OTHER> 3,685
<LONG-TERM> 9,355
0
0
<COMMON> 12,677
<OTHER-SE> 28,228
<TOTAL-LIABILITIES-AND-EQUITY> 493,637
<INTEREST-LOAN> 7,770
<INTEREST-INVEST> 1,342
<INTEREST-OTHER> 134
<INTEREST-TOTAL> 9,246
<INTEREST-DEPOSIT> 4,941
<INTEREST-EXPENSE> 5,171
<INTEREST-INCOME-NET> 4,075
<LOAN-LOSSES> 268
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 2,663
<INCOME-PRETAX> 1,806
<INCOME-PRE-EXTRAORDINARY> 1,806
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,251
<EPS-PRIMARY> .96
<EPS-DILUTED> .96
<YIELD-ACTUAL> 8.42
<LOANS-NON> 3,969
<LOANS-PAST> 3,877
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 7,846
<ALLOWANCE-OPEN> 5,500
<CHARGE-OFFS> 458
<RECOVERIES> 190
<ALLOWANCE-CLOSE> 5,500
<ALLOWANCE-DOMESTIC> 5,500
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
