<PAGE> 1
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
FARMERS AND MERCHANTS BANCORP, INC.
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(Name of Registrant as Specified in Its Charter)
- -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing
fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, schedule or registration statement no.:
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(3) Filing party:
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(4) Date filed:
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<PAGE> 2
PROXY STATEMENT
for
ANNUAL MEETING OF SHAREHOLDERS
April 5, 1997
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of Farmers & Merchants Bancorp, Inc., an
Ohio corporation ("Corporation") to be used at the Annual Meeting of
Shareholders of the Corporation, to be held at the Founders Hall, located at
Sauder Farm and Craft Village, State Route 2, Archbold, Ohio 43502 on
April 5, 1997 at 1:00 P.M., EST, and at any adjournments thereof, pursuant
to the accompanying Notice of Meeting.
You are requested to complete, date and sign the accompanying proxy and
return it promptly to the Corporation in the enclosed envelope. The proxy may
be revoked at any time before it is voted by written notice to the Corporation
prior to the meeting, and any shareholder attending the meeting may vote in
person whether or not he has previously submitted a proxy. Where no
instructions are indicated, proxies will be voted FOR the election of the
fifteen nominees for directors, and FOR the ratification of the appointment of
Krouse, Kern & Co., Inc. as the independent public accountants for the calendar
year 1997.
The Board of Directors has fixed the close of business on December 31,
1996 as the record date for the determination of shareholders who are entitled
to notice of and to vote at the meeting. The transfer books of the Corporation
will not be closed.
On the record date, there were outstanding 1,300,000 shares of the
Corporation's common stock, without par value ("Common Stock"), the holders
of which are entitled to one vote per share.
Other rights of a shareholder are:
A shareholder may
-- Abstain from voting on directors as a whole
-- Abstain from voting on other proxy matters
-- Abstain from voting for one or more nominees
-- Approve each proxy matter
-- Disapprove each proxy matter
-- Vote for or against each nominee without having
its proxy ignored
<PAGE> 3
The laws of Ohio under which the Corporation is incorporated provide
that, if notice in writing is given by any Shareholder to the President, Vice
President or the Secretary of the Corporation not less than 48 hours before the
time fixed for holding a meeting of Shareholders for the purpose of electing
Directors, that he desires that the voting at that election shall be
cumulative, and if an announcement of the giving of such notice is made upon
the convening of the meeting by the Chairman or Secretary or by or on behalf of
the Shareholder giving such notice, each Shareholder shall have the right to
cumulate such voting powers as he possesses in voting for Directors.
This Proxy Statement and the accompanying Notice of Annual Meeting of
Shareholders and Proxy are being mailed to the Corporation's shareholders on or
about March 7, 1997.
ELECTION OF DIRECTORS
The Code of Regulations of Farmers & Merchants Bancorp, Inc. provides
that the number of Directors to be elected at the Shareholder Meeting will be
determined by the vote of the Shareholders, but shall not be less than nine or
greater than twenty. Currently, the number of Directors is set at fifteen.
Fifteen Directors of the Corporation are to be elected at the meeting.
Each such Director will be elected to serve in accordance with the By Laws of
the Corporation until the next annual meeting of shareholders and until his
successor is elected and qualified. The favorable vote of holders of a majority
of the shares of Common Stock represented at the meeting, in person or by
proxy, is required to elect any nominee for director.
It is the intention of the individual named in the enclosed form for
proxy to vote such proxy for the election of directors of persons hereinafter
named. Management has no reason to believe that any of the nominees for the
office of director will not be available for election as a director. However,
should any of them become unwilling or unable to accept nomination for
election, it is intended that the individuals named in the enclosed proxy may
vote for the election of such other person or persons as management may
recommend.
Set forth below is information concerning the nominees for the election
to the Board of Directors.
<TABLE>
<CAPTION>
Year First
Principal Occupation or Became
Name Age Employment for Past Five Years Director
---- --- ------------------------------ -----------
<S> <C> <C> <C>
Charles Lugbill 69 President, Chairman of the Board 1968
The Farmers & Merchants State
Bank, President, Lugbill Bros.,
Inc.
Eugene Bernath 63 Farmer 1978
Jerry L. Boyers 63 President, Edifice Construction 1976
Management
Joe E. Crossgrove 60 Executive Vice President, Cashier 1992
The Farmers & Merchants State
Bank
Robert G. Frey 56 President, E. H. Frey & Sons, Inc. 1987
Lee E. Graffice 68 President, Graffice Motor Sales 1983
Jack C. Johnson 44 President, Hawk's Clothing, Inc. 1991
Partner, REJO Partnership
</TABLE>
<PAGE> 4
<TABLE>
<S> <C> <C> <C>
Dean E. Miller 52 President, MBC Holdings, Inc. 1986
Dale L. Nafziger 66 Retired 1969
Harold H. Plassman 67 Attorney, Plassman, Rupp, Hensel 1985
& Short
James L. Provost 68 Retired, Dyer & McDermott, Inc. 1995
James C. Saneholtz 50 President, Saneholtz-McKarns, Inc. 1995
Maynard Sauder 64 President, Sauder Woodworking Co. 1980
Merle J. Short 56 Farmer, President of Promow, Inc. 1987
Steven J. Wyse 52 President, Bil-Jax, Inc. 1991
</TABLE>
Harold H. Plassman is an attorney with membership in the law firm of
Plassman, Rupp, Hensal & Short of Archbold, Ohio. The law firm has been
retained by the Corporation, and its subsidiaries, during the past eleven years
and is to be retained currently.
MANAGEMENT RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE ELECTION OF
THE ABOVE-NAMED NOMINEES AS DIRECTORS OF THE CORPORATION.
OWNERSHIP OF COMMON STOCK
The following table sets forth the number of shares of Common Stock
beneficially owned at December 31, 1996 by (a) each person who is known by the
Corporation to beneficially own more than five percent of the Common Stock, (b)
each director and nominee, and (c) all directors and officers as a group.
<TABLE>
<CAPTION>
Name and Address of Amounts of Shares of Common
Beneficial Owner Stock Beneficially Owned Percent of Total
- ------------------- --------------------------- ----------------
<S> <C> <C>
Beneficial owners of more
than 5%:
None
Beneficial ownership of
nominees for director:
Eugene Bernath 3,510 .27%
Jerry Boyers 3,380 .26%
Joe E. Crossgrove 2,600 .20%
Robert Frey 3,280 .25%
Lee Graffice 10,110 .78%
Jack C. Johnson 1,075 .08%
Charles Lugbill 6,000 .46%
Dean Miller 7,475 .58%
Dale L. Nafziger 10,550 .81%
Harold H. Plassman 13,920 1.07%
James Provost 2,160 .17%
James Saneholtz 325 .03%
Maynard Sauder 17,870 1.37%
Merle J. Short 3,990 .31%
Steven J. Wyse 11,900 .92%
</TABLE>
<PAGE> 5
The Directors as a group hold and beneficially own 98,145 shares or
7.54% of the total outstanding shares of the Corporation as of December 31,
1996. Directors and principal officers as a group hold and beneficially own
137,670 shares or 10.59% of the total shares outstanding.
In the determination of beneficial ownership, management has limited
the inclusion of shares to members of shareholders' immediate household.
No family relationships exists between any directors or principal
officers and there are no arrangements or understandings between any Director
and principal officer and any other person.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors met eleven times during the 1996 calendar year.
All but four current directors of the Corporation attended at least seventy-five
percent of the meetings of the Board. Steven Wyse, Charles Lugbill and Dale
Nafziger attended seventy-three percent of the Board meetings. Dean Miller
attended sixty-four percent of the Board meetings. Average attendance at Board
meetings held during the year was eighty-seven percent.
The Board of Directors of the Bank subsidiary, The Farmers & Merchants
State Bank has an Audit Committee composed of Charles Lugbill, Director and
President, Eugene Bernath, Director and Vice President, Maynard Sauder,
Director and Vice President, Harold Plassman, Director and Kent Roth, Internal
Auditor. The function of the Audit Committee is to review the adequacy of the
Company's system of internal controls, to investigate the scope and adequacy of
the work of the Company's independent public accountants and to recommend to
the Board of Directors a firm of accountants to serve as the Company's
independent public accountants. The audit committee met three times during the
1996 year.
The Board of Directors of Farmers & Merchants Bancorp, Inc. does not
have a standing nominating or compensation committee or committees performing
similar functions. The Board of Directors of the Bank's subsidiary, however,
does have an Executive Salary Committee which is responsible for establishing
salary levels for its executive officers. This committee is composed of
Maynard Sauder, Eugene Bernath, Charles Lugbill, Jack Johnson and Joe
Crossgrove. Joe Crossgrove does not participate in the establishment of his
salary.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
The executive officers of the Company receive no compensation from the
Company for services rendered as executive officers of the Company. Instead,
they are paid by the Company's bank subsidiary, The Farmers & Merchants State
Bank, for services rendered in their capacity as executive officers of the
Company and its subsidiaries. The Company and its other non-bank subsidiaries
reimburse the Bank subsidiary for their share of applicable payroll costs.
Decisions on compensation are made by the Executive Salary Committee of The
Farmers & Merchants State Bank.
In determining the compensation of the executive officers of the
Company's subsidiaries, the subsidiaries have sought to create a compensation
program that relates compensation to financial performance, recognizes
individual contributions and achievements, and attracts and retains outstanding
executive officers.
Each year, the Executive Salary Committee of The Farmers & Merchants
State Bank sets a salary for its executive officers by reviewing the
performance of each officer, as well as, by making compensation comparisons
with banks of similar size in order to determine whether such salary levels are
adequate to attract and retain qualified executive officers. Officers, who are
also members of the Board of Directors, do not participate in the voting as it
pertains to compensation matters.
There are two components of the compensation program for all executive
officers of the Company's subsidiary, The Farmers & Merchants State Bank, a
base salary component and a bonus component, which is applicable to all
employees, set by the Board of Directors in December of each year, and paid in
that year.
The following table shows, for fiscal years ended December 31, 1996,
1995 and 1994, the cash compensation paid by the Company and its subsidiaries,
as well as, certain other compensation paid or accrued for those years, to Joe
E. Crossgrove, the Treasurer of Farmers & Merchants Bancorp, Inc., Executive
Vice President and Cashier of The Farmers & Merchants State Bank, and Vice
President of Farmers & Merchants Life Insurance Company. The holding company
has no employees; all compensation was paid by the bank subsidiary. None of
the other executive officers of the Company were paid salary and bonus for the
1996 fiscal year in an amount which exceeded $100,000.
<PAGE> 6
<TABLE>
<CAPTION>
Other
Name and Base Annual
Principal Position Year Salary Bonus Compensation
------------------ ---- ------ ----- ------------
<S> <C> <C> <C> <C>
Joe E. Crossgrove 1996 $101,485 $14,986 $11,326
Executive Vice 1995 90,900 15,102 10,618
President & Cashier 1994 86,785 12,664 1,100
</TABLE>
Salary includes directors' fees of $8,400 for 1996, 1995 and 1994.
Other compensation is the annual cost attributable to contributions to
the defined benefit pension plan and the 401(k) profit sharing plan.
Directors of The Farmers & Merchants State Bank are compensated at a
rate of $300 each for each meeting attended, plus a bonus of $600. Directors
receive no compensation for services performed while serving on special
committees.
No incidental benefits accrue to officers which, in the opinion of
management, are not job related, normal and appropriate in connection with the
conduct of the bank subsidiary's business affairs.
There are no long-term incentive programs or stock option programs in
effect.
RETIREMENT INCOME PLAN
The Farmers & Merchants State Bank maintained a trusteed retirement
income plan covering all employees who had attained the age of 21 and completed
six months of service on a full-time basis. The plan was a defined benefit
plan. The non-retired group had an average age of 36 years and an average age
at hire of 30 years, and an assumed retirement age of 65 as of August 1, 1995.
The plan called for benefits to be paid to eligible employees at normal
retirement age at a monthly benefit equal to 60% of average monthly
compensation less 50% of monthly Primary Social Security Amount, reduced
prorata for service less than 30 years. In no event would the monthly benefit
be less than the benefit accrued as of July 31, 1983. Benefits were also
available for early retirement at age 60 with 15 years of service: 1) payable
at age 65 equal to the accrued normal retirement pension using years of service
and average monthly compensation at the time of early retirement and assuming
the employee received no further compensation after retirement to calculate the
Primary Social Security Amount; or 2) an immediate pension equal to the one
above but reduced 5/9% for each month prior to age 65 that the pension
commences. The plan also had provisions for termination benefits and
pre-retirement death benefits.
The normal form of benefit payment was a 50% Joint and Survivor form if
married and a life with a minimum of 120 monthly payments guaranteed annuity
form otherwise.
Plan assets consisted solely of U.S. Government securities.
During 1996 the Bank terminated the defined benefit pension plan and
replaced it with a 401(k) profit sharing plan. Upon approval from the Internal
Revenue Service, the remaining assets of the defined benefit pension plan which
were in excess of future benefit obligations were allocated to participants by
increasing accrued pension benefits before plan termination. All assets were
transferred to the 401(k) profit sharing plan.
<PAGE> 7
PERFORMANCE GRAPH
Below is a graph comparing the yearly percentage change in the
Company's cumulative total shareholder return on its common shares with an
index for NASDAQ Stock Market (U.S. Companies) comprised of all domestic common
shares traded on the NASDAQ National Market System, and an index for financial
institutions with total assets less than $500 million compiled by SNL
Securities for the five-year period ended December 31, 1996.
The Board of Directors recognize that the market price of stock is
influenced by many factors, only one of which is performance. The stock price
performance shown on the graph is not necessarily indicative of future
performance.
RETURNS ASSUME DIVIDEND REINVESTMENT
INDEXED TO $100 AT 12/31/91
<TABLE>
<CAPTION>
Period Ending
------------------------------------------------------------------------------
Index 12/31/91 12/31/92 12/31/93 12/31/94 12/31/95 12/31/96
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Farmers & Merchants Bancorp, Inc. 100.00 140.71 164.43 166.91 215.67 278.95
NASDAQ Total Return 100.00 116.38 133.59 130.59 184.67 227.16
SNL < $500M Bank Index 100.00 132.05 172.41 185.43 253.67 326.50
</TABLE>
<PAGE> 8
INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS
Directors and principal officers of the bank subsidiary and their
associates were customers of, and had transactions with, the bank subsidiary in
the ordinary course of business during the year 1996. All loans and commitments
included in such transactions were made on substantially the same terms,
including interest rates and collateral, as those prevailing at the time for
comparable transactions with other persons and do not involve more than normal
risk of collectibility or present other unfavorable features. The maximum
aggregate amount of loans to directors and principal officers of the bank
subsidiary during 1996 was in the amount of $14.5 million. This maximum amount
occurred in September, 1996. The December 31, 1996 balance of director and
principal officer loans in the aggregate of $12.4 million amounts to 38.1% of
the equity capital of the bank subsidiary at that date. As of the date hereof,
all of such loans were performing loans.
RATIFICATION OF APPOINTMENT OF AUDITORS
The Board of Directors intends to reappoint the firm of Krouse, Kern &
Co., Inc., independent certified public accountants, to be auditors of the
Corporation and its subsidiaries for the calendar year ending December 31,
1997, and recommends to shareholders that they vote for ratification of that
appointment. Krouse, Kern & Co., Inc., served as auditors of the Corporation
and its subsidiaries for the year 1996. Although it is not required to do so,
the Board of Directors is submitting the appointment of Krouse, Kern & Co.,
Inc., for ratification by shareholders in order to ascertain the views of the
shareholders. If such appointment is not ratified, the Board will consider,
but not necessarily select other auditors.
Representatives of Krouse, Kern & Co., Inc., will be present at the
shareholders' meeting and will be given the opportunity to make a statement if
they desire to do so. They will also be available to respond to appropriate
questions. The Corporation has been advised by Krouse, Kern & Co., Inc., that
no member of that firm has any financial interest, either direct or indirect,
in the Corporation or its subsidiaries, other than as a depositor, and it has
no connections with the Corporation or its subsidiaries in any capacity other
than that of public accountants.
MANAGEMENT RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR RATIFICATION OF THE
RETENTION OF KROUSE, KERN & CO., INC.
PROPOSALS OF SHAREHOLDERS FOR NEXT ANNUAL MEETING
Proposals of shareholders intended to be presented at the 1998 Annual
Shareholders' Meeting must be received at the Corporation's offices at 307-11
North Defiance Street, Archbold, Ohio 43502, prior to December 1, 1997 for
inclusion in the proxy statement and form of proxy.
OTHER MATTERS
The Board of Directors does not know of any other matters which are
likely to be brought before the meeting. However, in the event that any other
matters properly come before the meeting, the persons named in the enclosed
proxy will vote said proxy in accordance with their judgment on such matters.
The cost of preparing, assembling and mailing this Proxy Statement, the
Notice of Meeting and the enclosed proxy will be borne by the Corporation.
In addition to the solicitation of proxies by use of the mails, the
Corporation will utilize the services of some of its officers as well as
regular employees of the bank subsidiary (who will receive no compensation
therefor in addition to their regular salaries as paid by the bank subsidiary)
to solicit proxies personally and by telephone. The Corporation will request
banks and other custodians, nominees and fiduciaries to forward copies of the
proxy material to their principals and to request authority for the execution of
proxies, and will reimburse such persons for their expenses in so doing.
<PAGE> 9
A copy of the Corporation's Annual Report to Shareholders for the year
ended December 31, 1996 is enclosed. A copy of the Corporation's Annual Report
on Form 10-K for such year, with exhibits, as filed with the Securities and
Exchange Commission ("1996 10-K"), is available to any shareholder free of
charge. Shareholders desiring a copy of the 1996 10-K should address written
requests to Mr. Joe E. Crossgrove, Executive Vice President of Farmers &
Merchants Bancorp, Inc., 307-11 North Defiance Street, Archbold, Ohio 43502,
and are asked to mark "1996 10-K Request" on the outside of the envelope
containing the request.
By Order of the Board of Directors
-----------------------------------
Carol J. England
Secretary
Archbold, Ohio
March 7, 1997
<PAGE> 10
PROXY
FARMERS & MERCHANTS BANCORP, INC.
ARCHBOLD, OHIO
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS AND MAY BE REVOKED AT
ANY TIME PRIOR TO ITS EXERCISE, BY OBTAINING THE PROXY FROM THE SECRETARY, WHO
WILL GIVE YOU THE PROXY UPON ORAL OR WRITTEN REQUEST.
The undersigned hereby appoints Charles Lugbill and Eugene Bernath or
any one or more of them, the attorneys and proxies of the undersigned, with
power of substitution to act with respect to all shares of the Capital Stock of
Farmers & Merchants Bancorp, Inc. registered in the name of the undersigned,
with all powers which the undersigned would possess if personally present at
the Annual Meeting of the Shareholders of Farmers & Merchants Bancorp, Inc. to
be held in the Founders Hall at Sauder Farm and Craft Village, State Route 2,
Archbold, Ohio, on Saturday, April 5, 1997, at 1:00 P.M., EST, and at any
adjournments thereof, and to vote as follows:
1. Fixing the number of Directors to be elected at 15 and the election of
the 15 nominees namely: Eugene Bernath, Jerry L. Boyers, Joe E.
Crossgrove, Robert Frey, Lee Graffice, Jack Johnson, Charles Lugbill,
Dean Miller, Dale L. Nafziger, Harold H. Plassman, James Provost, James
Saneholtz, Maynard Sauder, Merle Short, and Steven J. Wyse.
__________For __________Withhold Authority
IF YOU WISH TO WITHHOLD AUTHORITY FOR ANY NOMINEE, PLEASE DRAW A LINE
THROUGH THE NOMINEE'S NAME.
2. To ratify the appointment of Krouse, Kern & Co., Inc., as independent
auditors of the Corporation and its subsidiaries for the calendar year
ending December 31, 1997.
3. To transact any and all other business as may properly come before the
meeting or any adjournments thereof.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED FOR THE PROPOSITIONS
LISTED ABOVE UNLESS INDICATED TO THE CONTRARY. IF ANY OTHER BUSINESS IS
PRESENTED AT SAID MEETING, THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE
RECOMMENDATIONS OF SAID MEETING.
The majority of said attorneys and proxies at said meeting and
adjournments thereof, (or if only one be present, then that one), shall have and
may exercise all of the powers of said attorneys and proxies.
DATED ______________, 1997
____________________________________
____________________________________
(If signed in a fiduciary capacity, please give full fiduciary title.
If signed by a corporation, sign the full corporate name followed by the
signature of the duly authorized officer. If signed by an agent, attach the
instrument authorizing the agent to execute the proxy or a photocopy thereof).
Please sign and date the Proxy and return it in the enclosed envelope.
<PAGE> 11
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To be held April 5, 1997
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of
Farmers & Merchants Bancorp, Inc., an Ohio corporation ("Corporation") will be
held at Founders Hall, located at Sauder Farm and Craft Village, State Route 2,
Archbold, Ohio 43502 on April 5, 1997 at 1:00 P.M., EST, for the following
purposes:
1. To elect fifteen directors of the Corporation;
2. To ratify the appointment of Krouse, Kern & Co., Inc. as
independent auditors of the Corporation and its subsidiary for
the calendar year ending December 31, 1997;
3. To transact such other business as may properly come before the
meeting or any adjournments thereof.
The Board of Directors has fixed the close of business on December 31,
1996, as the record date for the determination of shareholders who are entitled
to notice of and to vote at the meeting.
By Order of the Board of Directors
----------------------------------
Carol J. England
Secretary
Archbold, Ohio
March 7, 1997
YOU ARE URGED TO SPECIFY YOUR CHOICES, DATE, AND SIGN THE ACCOMPANYING
PROXY AND MAIL IT PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE, WHETHER OR
NOT YOU PLAN TO ATTEND THE MEETING.
