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<PAGE> 1
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 nine months ended September 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 offices) (Zip Code)
Registrant's Telephone Number, including area code 419/446-2501
Not applicable
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 November 6, 1996
Common Stock, No Par Value 1,300,000
<PAGE> 2
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
FARMERS & MERCHANTS BANCORP, INC.
INDEX
FORM 10-Q ITEMS PAGE NO.
PART 1. FINANCIAL INFORMATION
Item I. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets-
September 30, 1996, December 31, 1995 and
September 30, 1995 1
Condensed Consolidated Statements of Net Earnings-
Nine Months Ended September 30, 1996 and
September 30, 1995 2
Condensed Consolidated Statements of Cash Flows-
Nine Months Ended September 30, 1996 and
September 30, 1995 3
Notes to Condensed Financial Statements 4
Item 2. Management's Discussion and Analysis of Financial Condition
Results of Operations 5
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 6
SIGNATURES 7
<PAGE> 3
FARMERS & MERCHANTS BANCORP, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(Unaudited)
(in thousands of dollars)
<TABLE>
<CAPTION>
September 30, 1996 December 31, 1995 September 30, 1995
<S> <C> <C> <C>
ASSETS:
Cash and due from banks $ 14,233 $ 14,951 $ 12,773
Interest bearing deposits in other banks 145 100 145
Federal funds sold and securities sold
under agreement to resell -- 10,710 13,510
Investment Securities:
U.S. Treasury 26,975 22,757 21,623
U.S. Government Agencies 32,254 31,237 26,803
State & political obligations 23,991 19,926 18,086
All others 17,247 10,795 6,102
Loans and leases 369,216 339,676 338,252
Bank premises and equipment 7,521 7,198 7,282
Accrued interest and other assets 7,306 6,740 7,147
TOTAL ASSETS $498,888 $464,090 $451,723
LIABILITIES AND SHAREHOLDERS' EQUITY:
LIABILITIES:
Deposits:
Demand $ 38,210 $ 37,436 $ 21,826
Time and savings 393,758 366,554 372,097
Federal funds purchased and securities
sold under agreement to repurchase 11,903 6,919 5,926
Other borrowed money 9,193 9,662 9,892
Accrued interest and other liabilities 3,948 3,898 3,301
TOTAL LIABILITIES 457,012 424,469 413,042
SHAREHOLDERS' EQUITY:
Common stock, no par value - authorized
300,000 shares, issued 260,000 shares in
1996 and 1995 12,677 12,677 12,677
Undivided profits 29,199 26,944 26,004
TOTAL SHAREHOLDERS' EQUITY 41,876 39,621 38,681
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $498,888 $464,090 $451,723
</TABLE>
See Notes to Condensed Consolidated Unaudited Financial Statements.
Note: The December 31, 1995 Balance Sheet has been derived from the audited
financial statements of that date.
<PAGE> 4
FARMERS & MERCHANTS BANCORP, INC.
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(Unaided)
(in thousands of dollars)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, 1996 September 30, 1995 September 30, 1996 September 30, 1995
<S> <C> <C> <C> <C>
INTEREST INCOME:
Loans and leases $23,885 $21,518 $8,144 $7,450
Investment Securities:
U.S. Treasury 1,094 725 418 278
U.S. Government Agencies 1,569 1,086 537 332
States & Political Subdivisions 915 852 331 270
Other 579 367 272 109
Federal funds sold 303 250 2 124
Deposits with other banks -- -- -- --
TOTAL INTEREST INCOME 28,345 24,798 9,704 8,563
INTEREST EXPENSE:
Deposits 14,887 11,955 5,058 4,513
Short-term borrowings 284 274 362 77
Other borrowed money 449 483 147 151
TOTAL INTEREST EXPENSE 15,620 12,712 5,567 4,741
NET INTEREST INCOME BEFORE
PROVISION FOR LOAN LOSSES 12,725 12,086 4,137 3,822
PROVISION FOR LOAN LOSSES 790 -- 377 --
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 11,935 12,086 3,760 3,822
OTHER INCOME:
Service charges 818 750 285 254
Other 1,192 1,021 424 568
Securities gains (losses) -- (27) -- 2
TOTAL OTHER INCOME 2,010 1,744 709 824
OTHER EXPENSE:
Salaries 3,639 2,902 1,241 992
Pension and employee benefits 738 669 273 264
Occupancy 949 875 332 316
Other operating 2,882 3,087 781 915
TOTAL OTHER EXPENSES 8,208 7,533 2,627 2,487
NET INCOME BEFORE INCOME TAX 5,737 6,297 1,842 2,159
PROVISION FOR INCOME TAX 1,653 1,882 492 670
NET INCOME $4,084 $4,415 $1,350 $1,489
NET INCOME PER SHARE (Based upon
weighted average number of shares
outstanding of 1,300,000 for 1995 and 1996 $ 3.14 $ 3.40 $ 1.04 $ 1.15
</TABLE>
See Notes to Condensed Consolidated Unaudited Financial Statements.
<PAGE> 5
FARMERS & MERCHANTS BANCORP, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaided)
(in thousands of dollars)
<TABLE>
<CAPTION>
Nine Months Ended
September 30, 1996 September 30, 1995
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 4,084 $ 4,415
Adjustments to Reconcile Net Income to
Cash Provided by Operating Activities:
Depreciation & amortization 549 460
Premium amortization 463 97
Discount accretion (131) (590)
Provision for loan losses 790 --
Provision for deferred taxes (209) 325
(Gain) loss on sale of securities -- (27)
Changes in Operating Assets & Liabilities:
Accrued interest receivable (389) (1,192)
Accrued interest payable 406 628
TOTAL CASH PROVIDED BY
OPERATING ACTIVITIES - 5,563 4,116
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (872) (24,480)
Purchase of securities (16,083) (996)
Proceeds from maturities of securities 0 29,513
Net change in loans and leases (30,328) (36,670)
TOTAL CASH PROVIDED BY
INVESTING ACTIVITIES - (47,283) (32,633)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net change in deposits 27,978 49,528
Net change in short-term borrowings 4,984 (8,472)
Increase in long-term borrowings -- 400
Payments on long-term borrowings (469) (383)
Payment of dividends (1,300) (1,040)
Unrealized (gains) losses on securities (856) 444
TOTAL CASH PROVIDED BY
FINANCING ACTIVITIES 30,337 40,477
NET CHANGE IN CASH FLOWS (11,383) 11,960
CASH AND CASH EQUIVALENTS AT
BEGINNING OF YEAR 25,761 14,452
CASH AND CASH EQUIVALENTS AT
END OF YEAR $ 14,378 $ 26,412
RECONCILEMENT OF CASH AND
CASH EQUIVALENTS
Cash and due from banks $ 14,233 $ 12,757
Interest bearing deposits 145 145
Federal funds sold -- 13,510
TOTAL CASH AND CASH
EQUIVALENTS $ 14,378 $ 26,412
</TABLE>
See Notes to Condensed Consolidated Unaudited Financial Statements.
<PAGE> 6
FARMERS & MERCHANTS BANCORP, INC.
Notes to Condensed Consolidated Unaided Financial Statements
Note 1. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordace 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 nine months ended September
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.
<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 & Merchants
Bancorp, Inc., and its subsidiaries The Farmers & Merchants State Bank
and Farmers & Merchants Life Insurance Company are engaged in
commercial banking and life and disability insurance, respectively.
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 increases in this
area due to the major renovation of one of the branch offices.
The following is a list of four capital ratios as they are calculated
from the September 30, 1996 financial statements:
Risk-based Capital Ratio 12.80%
Leverage Capital Ratio 8.35%
Risk Based Capital Tier 1 11.55%
Tangible Equity Radio 8.14%
During the first nine months of 1996, the bank's loan portfolio has
increased $30,358,000. This represents a 9% increase. This was the
primary use of cash over the period. An increase of $27,978,000 in
deposits was noted at the quarter ended September 30, 1996. This
represents a 7% 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 effort has been implemented to attract more
"core" deposits to help with the maintaining of an acceptable net
interest margin.
<PAGE> 8
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 September 30, 1996.
<PAGE> 9
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, Inc.,
Date: November 12, 1996 By: /s/ Joe E. Crossgrove
------------------------------
Joe E. Crossgrove
Executive Vice-President and
Cashier
Date: November 12, 1996 By: /s/ Randal H. Schroeder
------------------------------
Randal H. Schroeder
Asst. Vice-President and
Chief Accounting Officer
<PAGE> 10
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 14,233
<INT-BEARING-DEPOSITS> 145
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 100,467
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 374,716
<ALLOWANCE> 5,500
<TOTAL-ASSETS> 498,888
<DEPOSITS> 431,968
<SHORT-TERM> 11,903
<LIABILITIES-OTHER> 3,948
<LONG-TERM> 9,193
0
0
<COMMON> 12,677
<OTHER-SE> 29,199
<TOTAL-LIABILITIES-AND-EQUITY> 498,888
<INTEREST-LOAN> 23,885
<INTEREST-INVEST> 4,157
<INTEREST-OTHER> 303
<INTEREST-TOTAL> 28,345
<INTEREST-DEPOSIT> 14,887
<INTEREST-EXPENSE> 733
<INTEREST-INCOME-NET> 12,725
<LOAN-LOSSES> 790
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 6,198
<INCOME-PRETAX> 5,737
<INCOME-PRE-EXTRAORDINARY> 5,737
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,084
<EPS-PRIMARY> 3.14
<EPS-DILUTED> 3.14
<YIELD-ACTUAL> 8.14
<LOANS-NON> 2,399
<LOANS-PAST> 3,886
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 6,285
<ALLOWANCE-OPEN> 5,500
<CHARGE-OFFS> 1,259
<RECOVERIES> 469
<ALLOWANCE-CLOSE> 5,500
<ALLOWANCE-DOMESTIC> 5,500
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
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