<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 June 30, 1997
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from ________________ to _____________________
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 August 1, 1997
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
FARMERS & MERCHANTS BANCORP, INC.
INDEX
<TABLE>
<CAPTION>
FORM 10-Q ITEMS PAGE NO.
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets-
June 30, 1997, December 31, 1996 and June 30, 1996 1
Condensed Consolidated Statements of Net Earnings-
Three Months and Year to Date Ended June 30, 1997 and 1996 2
Condensed Consolidated Statements of Cash Flows-
Six Months Ended June 30, 1997 and June 30, 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
6
Item 6. Exhibits and Reports on Form 8K
SIGNATURES 7
</TABLE>
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FARMERS & MERCHANTS BANCORP, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(Unaudited)
(in thousands of dollars)
<TABLE>
<CAPTION>
Jun 30, 1997 Dec 31, 1996 Jun 30, 1996
<S> <C> <C> <C>
ASSETS:
Cash and due from banks $14,126 $15,871 $12,846
Interest bearing deposits in other banks 145 100 145
Federal funds sold and securities sold
under agreement to resell - - 10,620
Investment Securities:
U.S. Treasury 24,771 27,827 27,880
U.S. Government Agencies 31,137 32,896 36,337
State & political obligations 23,376 21,678 25,047
All others 17,799 19,320 13,941
Loans and leases 380,169 369,219 352,414
Bank premises and equipment 7,428 7,576 7,332
Accrued interest and other assets 7,501 6,962 7,075
TOTAL ASSETS $ 506,452 $ 501,449 $ 493,637
LIABILITIES AND SHAREHOLDERS' EQUITY:
LIABILITIES:
Deposits:
Demand $ 39,585 $ 50,019 $ 40,663
Time and savings 401,341 388,358 393,873
Federal funds purchased and securities
sold under agreement to repurchase 6,457 6,763 5,156
Other borrowed money 8,651 8,998 9,355
Accrued interest and other liabilities 4,491 3,930 3,685
TOTAL LIABILITIES 460,525 458,068 452,732
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 33,250 30,704 28,228
TOTAL SHAREHOLDERS' EQUITY 45,927 43,381 40,905
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 506,452 $ 501,449 $ 493,637
</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 Ended Six Months Ended
Jun 30, 1997 Jun 30, 1996 Jun 30, 1997 Jun 30, 1996
<S> <C> <C> <C> <C>
INTEREST INCOME:
Loans and leases $ 8,457 $ 7,770 $ 16,857 $ 15,741
Investment Securities:
U.S. Treasury 385 361 773 676
U.S. Government Agencies 521 536 1,062 1,032
States & Political Subdivisions 308 297 609 584
Other 316 148 704 307
Federal funds sold 36 134 104 301
Deposits with other banks - - - -
TOTAL INTEREST INCOME 10,023 9,246 20,109 18,641
INTEREST EXPENSE:
Deposits 5,081 4,941 10,105 9,829
Short-term borrowings 51 80 135 170
Other borrowed money 289 150 581 302
TOTAL INTEREST EXPENSE 5,421 5,171 10,821 10,301
NET INTEREST INCOME BEFORE
PROVISION FOR LOAN LOSSES 4,602 4,075 9,288 8,340
PROVISION FOR LOAN LOSSES 249 268 462 413
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 4,353 3,807 8,826 7,927
OTHER INCOME:
Service charges 274 274 569 533
Other 299 388 764 768
Securities gains (losses) (3) - (10) -
TOTAL OTHER INCOME 570 662 1,323 1,301
OTHER EXPENSE:
Salaries 861 1,195 2,100 2,398
Pension and employee benefits 290 233 544 465
Occupancy 323 268 634 617
Other operating 1,005 967 1,971 1,853
TOTAL OTHER EXPENSES 2,479 2,663 5,249 5,333
NET INCOME BEFORE INCOME TAX 2,444 1,806 4,900 3,895
PROVISION FOR INCOME TAX 709 555 1,432 1,161
NET INCOME $ 1,735 $ 1,251 $ 3,468 $ 2,734
NET INCOME PER SHARE (Based upon
weighted average number of shares
outstanding of 1,300,000 for 1997 and 1996 $ 1.33 $ 0.96 $ 2.67 $ 2.10
DIVIDENDS PER SHARE DECLARED $ 0.25 $ 0.25 $ 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>
Six Months Ended
Jun 30, 1997 Jun 30, 1996
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net income $ 3,468 $ 2,734
Adjustments to Reconcile Net Income to
Cash Provided by Operating Activities:
Depreciation & amortization 326 347
Premium amortization 238 336
Discount accretion (87) (76)
Provision for loan losses 462 413
Provision for deferred taxes (27) 229
(Gain) loss on sale of securities 10 -
Changes in Operating Assets & Liabilities:
Accrued interest receivable and other assets (390) (106)
Accrued interest payable and other payables 756 111
TOTAL CASH PROVIDED BY
OPERATING ACTIVITIES 4,756 3,988
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (178) (480)
Proceeds from sale of available for sale securities 3,972 -
Proceeds from maturities of available for sale securities 51,934 -
Purchase of available for sale securities (51,823) (18,749)
Net change in loans and leases (11,412) (12,739)
TOTAL CASH PROVIDED BY
INVESTING ACTIVITIES (7,507) (31,968)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net change in deposits 2,549 30,674
Net change in short-term borrowings (306) (1,762)
Increase in long-term borrowings - -
Payments on long-term borrowings (347) (307)
Payment of dividends (845) (975)
Unrealized (gains) losses on securities - (800)
TOTAL CASH PROVIDED BY
FINANCING ACTIVITIES 1,051 26,830
NET CHANGE IN CASH FLOWS (1,700) (1,150)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF YEAR 15,971 24,761
CASH AND CASH EQUIVALENTS AT
END OF YEAR $ 14,271 $ 23,611
RECONCILEMENT OF CASH AND
CASH EQUIVALENTS
Cash and due from banks $ 14,126 $ 12,846
Interest bearing deposits 145 145
Federal funds sold - 10,620
TOTAL CASH AND CASH
EQUIVALENTS $ 14,271 $ 23,611
</TABLE>
See Notes to Condensed Consolidated Unaudited Financial Statements.
3
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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 six months ended June 30, 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 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 for 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.
During the first six months of 1997 the bank's loan portfolio has increased
$10,950,000. This represents a 3% increase. This was the primary use of cash
over the period. An increase of $2,549,000 in deposits was noted for the
quarter ended June 30, 1997. This represents a 1% 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.
The following is a list of five capital ratios as they are calculated from the
June 30, 1997 financial statements:
Primary Ratio 10.07%
Total Capital Ratio 11.76%
Risk Based Capital Tier 1 13.00%
Risk Based Capital Tier 2 17.06%
Stockholders' Equity/Total Assets 9.07%
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
June 30, 1997.
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, Inc.,
Date: August 11, 1997 By: /s/ Joe E. Crossgrove
------------------------------
Joe E. Crossgrove
President and Cashier
Date: August 11, 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
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 14,126
<INT-BEARING-DEPOSITS> 145
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 97,083
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 380,169
<ALLOWANCE> 0
<TOTAL-ASSETS> 506,542
<DEPOSITS> 440,926
<SHORT-TERM> 6,457
<LIABILITIES-OTHER> 4,491
<LONG-TERM> 8,651
0
0
<COMMON> 12,677
<OTHER-SE> 33,250
<TOTAL-LIABILITIES-AND-EQUITY> 506,452
<INTEREST-LOAN> 16,857
<INTEREST-INVEST> 3,148
<INTEREST-OTHER> 104
<INTEREST-TOTAL> 20,109
<INTEREST-DEPOSIT> 10,105
<INTEREST-EXPENSE> 716
<INTEREST-INCOME-NET> 9,288
<LOAN-LOSSES> 462
<SECURITIES-GAINS> (10)
<EXPENSE-OTHER> 5,249
<INCOME-PRETAX> 4,900
<INCOME-PRE-EXTRAORDINARY> 4,900
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,468
<EPS-PRIMARY> 2.67
<EPS-DILUTED> 2.67
<YIELD-ACTUAL> 3.65
<LOANS-NON> 2,052
<LOANS-PAST> 1,495
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 3,547
<ALLOWANCE-OPEN> 5,500
<CHARGE-OFFS> 749
<RECOVERIES> 454
<ALLOWANCE-CLOSE> 5,667
<ALLOWANCE-DOMESTIC> 5,667
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
