<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[x] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended March 31, 1997
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to
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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, Archbold, Ohio 43502
- ------------------------------------------------ -------------------------
(Address of principal executive offices) (Zip Code)
(419) 446-2501
- --------------------------------------------------------------------------------
Registrant's Telephone Number, including area code
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 period 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:
Common Stock, No Par Value 1,300,000
- ------------------------------- ------------------------------------
Class Outstanding as of May 1, 1997
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
FARMERS & MERCHANTS BANCORP, INC.
INDEX
FORM 10-Q ITEMS PAGE NO.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets-
March 31, 1997, December 31, 1996 and March 31, 1996 1
Condensed Consolidated Statements of Net Earnings-
Three Months Ended March 31, 1997 and March 31, 1996 2
Condensed Consolidated Statements of Cash Flows-
Three Months Ended March 31, 1997 and March 31, 1996 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 8K 6
SIGNATURES 7
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FARMERS & MERCHANTS BANCORP, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(Unaudited)
(in thousands of dollars)
<TABLE>
<CAPTION>
March 31, 1997 December 31, 1996 March 31, 1996
<S> <C> <C> <C>
ASSETS:
Cash and due from banks $ 13,956 $ 15,871 $ 11,996
Interest bearing deposits in other banks 145 100 145
Federal funds sold and securities sold
under agreement to resell 1,320 - 14,335
Investment Securities:
U.S. Treasury 24,558 27,827 22,719
U.S. Government Agencies 33,459 32,896 34,475
State & political obligations 23,613 21,678 21,464
All others 21,555 19,320 10,777
Loans and leases 370,312 369,219 349,205
Bank premises and equipment 7,460 7,576 7,216
Accrued interest and other assets 6,878 6,962 7,241
TOTAL ASSETS $ 503,256 $ 501,449 $ 479,573
LIABILITIES AND SHAREHOLDERS' EQUITY:
LIABILITIES:
Deposits:
Demand $ 37,774 $ 50,019 $ 35,873
Time and savings 405,740 388,358 383,824
Federal funds purchased and securities
sold under agreement to repurchase 2,860 6,763 6,450
Other borrowed money 8,826 8,998 9,523
Accrued interest and other liabilities 3,740 3,930 3,710
TOTAL LIABILITIES 458,940 458,068 439,380
SHAREHOLDERS' EQUITY:
Common stock, no par value - authorized
1,500,000 shares, issued 1,300,000 shares in
1996 and 1995 12,677 12,677 12,677
Undivided profits 31,639 30,704 27,516
TOTAL SHAREHOLDERS' EQUITY 44,316 43,381 40,193
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 503,256 $ 501,449 $ 479,573
</TABLE>
See Notes to Condensed Consolidated Unaudited Financial Statements.
Note: The December 31, 1996 Balance Sheet has been derived from the audited
financial statements of that date.
1
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FARMERS & MERCHANTS BANCORP, INC.
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
(in thousands of dollars)
<TABLE>
<CAPTION>
Three Months & Year to Date Ended
March 31, 1997 March 31, 1996
<S> <C> <C>
INTEREST INCOME:
Loans and leases $ 8,400 $ 7,971
Investment Securities:
U.S. Treasury 388 315
U.S. Government Agencies 541 496
States & Political Subdivisions 301 287
Other 388 159
Federal funds sold 68 167
Deposits with other banks - -
TOTAL INTEREST INCOME 10,086 9,395
INTEREST EXPENSE:
Deposits 5,025 4,888
Short-term borrowings 84 90
Other borrowed money 292 152
TOTAL INTEREST EXPENSE 5,401 5,130
NET INTEREST INCOME BEFORE
PROVISION FOR LOAN LOSSES 4,685 4,265
PROVISION FOR LOAN LOSSES 213 145
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 4,472 4,120
OTHER INCOME:
Service charges 295 259
Other 465 380
Securities gains (losses) (7) -
TOTAL OTHER INCOME 753 639
OTHER EXPENSE:
Salaries 1,239 1,203
Pension and employee benefits 254 232
Occupancy 311 349
Other operating 966 886
TOTAL OTHER EXPENSES 2,770 2,670
NET INCOME BEFORE INCOME TAX 2,455 2,089
PROVISION FOR INCOME TAX 723 606
NET INCOME $ 1,732 $ 1,483
NET INCOME PER SHARE (Based upon
weighted average number of shares
outstanding of 1,300,000 for 1997 and 1996 $ 1.33 $ 1.14
DIVIDENDS PER SHARE DECLARED $ 0.25 $ 0.25
</TABLE>
See Notes to Condensed Consolidated Unaudited Financial Statements.
2
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FARMERS & MERCHANTS BANCORP, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
(in thousands of dollars)
<TABLE>
<CAPTION>
Three Months Ended
March 31, 1997 March 31, 1996
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,735 $ 1,483
Adjustments to Reconcile Net Income to
Cash Provided by Operating Activities:
Depreciation & amortization 163 198
Premium amortization 120 161
Discount accretion (47) (39)
Provision for loan losses 213 145
Provision for deferred taxes 5 87
(Gain) loss on sale of securities - -
Changes in Operating Assets & Liabilities: 7 -
Accrued interest receivable 312 (415)
Accrued interest payable 5 136
TOTAL CASH PROVIDED BY
OPERATING ACTIVITIES 2,513 1,756
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (47) (216)
Proceeds from sale of available for sale securities 1,979 -
Proceeds from maturities of available for sale securities 35,488 -
Purchase of available for sale securities (35,773) (4,358)
Net change in loans and leases (5,252) (9,529)
TOTAL CASH PROVIDED BY
INVESTING ACTIVITIES (3,605) (14,103)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net change in deposits 5,137 15,707
Net change in short-term borrowings (3,903) (469)
Increase in long-term borrowings - -
Payments on long-term borrowings (172) (139)
Payment of dividends (520) (650)
Unrealized (gains) losses on securities - (387)
TOTAL CASH PROVIDED BY
FINANCING ACTIVITIES 542 14,062
NET CHANGE IN CASH FLOWS (550) 1,715
CASH AND CASH EQUIVALENTS AT
BEGINNING OF YEAR 15,971 24,761
CASH AND CASH EQUIVALENTS AT
END OF YEAR $ 15,421 $ 26,476
RECONCILEMENT OF CASH AND
CASH EQUIVALENTS
Cash and due from banks $ 13,956 $ 11,996
Interest bearing deposits 145 145
Federal funds sold 1,320 14,335
TOTAL CASH AND CASH
EQUIVALENTS $ 15,421 $ 26,476
</TABLE>
See Notes to Condensed Consolidated Unaudited Financial Statements.
3
<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 accordance with generally accepted accounting
principles for interim financial information and with the
instructions for Form 10Q and Rule 10-01 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 three months ended March 31, 1997 are not
necessarily indicative of the results that are expected for
the year ended December 31, 1997. 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, 1996.
On June 28, 1996, the Board of Directors authorized a five-for-one
stock split, thereby increasing the total number of shares authorized
to 1,500,000 and the total number of shares issued and outstanding to
1,300,000. All references in the accompanying financial statements
have been restated to reflect the stock split.
4
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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 for the three months ended March 31, 1997 comes
primarily from net income from operations of $1.7 million and
from a $5.1 million increase in deposits. This increase in deposits
represents a 1% increase from the December 31, 1996 deposits of $438
million. A concerted marketing effort has been implemented to attract
more core deposits to help in maintaining an acceptable net interest
margin.
The principal uses of these funds were for the retirement of short-term
debt and the funding of additional loans in the community. During the
first three months of 1997, the loan portfolio increased by $5 million
representing a one percent increase over December 31, 1996 levels.
During the first quarter of 1997 pursuant to regulatory mandates,
commercial paper has been reclassified from the loan portfolio to the
investment portfolio. For purposes of the statement of cash flows,
this reclassification was deemed retroactive to December 31, 1996.
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. Spending in this area
will increase in the next few months due to the major renovation of
one of the branch offices.
The following is a list of five capital ratios as they are calculated
from the March 31, 1997 financial statements:
Primary Ratio 9.81%
Total Capital Ratio 11.54%
Risk Based Capital Tier 1 12.73%
Risk Based Capital Tier 2 16.87%
Stockholders' Equity/Total Assets 8.81%
5
<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 March 31, 1997.
6
<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: May 1, 1997 By: /s/ Joe E. Crossgrove
Joe E. Crossgrove
President and Cashier
Date: May 1, 1997 By: /s/ Randal H. Schroeder
Randal H. Schroeder
Asst. Vice-President
and Chief Operating Officer
7
<PAGE> 10
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 13,946
<INT-BEARING-DEPOSITS> 145
<FED-FUNDS-SOLD> 1,320
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 103,185
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 375,889
<ALLOWANCE> 5,577
<TOTAL-ASSETS> 503,256
<DEPOSITS> 443,514
<SHORT-TERM> 2,860
<LIABILITIES-OTHER> 3,740
<LONG-TERM> 8,826
0
0
<COMMON> 12,677
<OTHER-SE> 31,639
<TOTAL-LIABILITIES-AND-EQUITY> 503,256
<INTEREST-LOAN> 8,400
<INTEREST-INVEST> 1,618
<INTEREST-OTHER> 68
<INTEREST-TOTAL> 10,086
<INTEREST-DEPOSIT> 5,025
<INTEREST-EXPENSE> 376
<INTEREST-INCOME-NET> 4,685
<LOAN-LOSSES> 213
<SECURITIES-GAINS> (7)
<EXPENSE-OTHER> 2,010
<INCOME-PRETAX> 2,455
<INCOME-PRE-EXTRAORDINARY> 1,732
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,732
<EPS-PRIMARY> 1.33
<EPS-DILUTED> 1.33
<YIELD-ACTUAL> 3.71
<LOANS-NON> 3,042
<LOANS-PAST> 2,729
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 5,771
<ALLOWANCE-OPEN> 5,500
<CHARGE-OFFS> 353
<RECOVERIES> 217
<ALLOWANCE-CLOSE> 5,577
<ALLOWANCE-DOMESTIC> 5,577
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
