<PAGE> 1
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 September 30, 1999
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 0-14492
-----------------------------
FARMERS & MERCHANTS BANCORP, INC.
---------------------------------
(Exact name of registrant as specified in its charter)
OHIO 34-1469491
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(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
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Registrant's telephone number, including area code
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal
year, if changed since last report.)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or Section 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 October 1, 1999
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10Q
FARMERS & MERCHANTS BANCORP, INC.
INDEX
<TABLE>
<CAPTION>
Form 10-Q Items Page
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<S> <C> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets-
September 30, 1999, December 31, 1998 and September 30, 1998 1
Condensed Consolidated Statements of Net Earnings-
Nine Months Ended September 30, 1999 and September 30, 1998 2
Condensed Consolidated Statements of Cash Flows-
Nine Months Ended September 30, 1999 and September 30, 1998 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 8K 6
Signatures 7
</TABLE>
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FARMERS & MERCHANTS BANCORP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands of dollars)
<TABLE>
<CAPTION>
Sept 30, 1999 December 31, 1998 Sept 30, 1998
<S> <C> <C> <C>
ASSETS:
Cash and due from banks $ 14,742 $ 18,549 $ 15,528
Interest bearing deposits with banks 100 100 100
Federal funds sold 0 19,045 9,935
Investment Securities:
U.S. Treasury 6,958 17,112 17,286
U.S. Government 48,440 49,567 40,486
State & political obligations 32,634 35,520 30,727
All others 15,885 21,712 24,617
Loans and leases 456,574 407,721 396,281
Bank premises and equipment-net 9,755 9,430 8,918
Accrued interest and other assets 8,935 7,113 7,287
TOTAL ASSETS $ 594,023 $ 585,869 $ 551,165
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES:
Deposits:
Demand $ 62,352 $ 52,631 $ 40,771
Time and savings 429,166 459,552 437,345
Federal funds purchased and securities
sold under agreement to repurchase 15,433 2,916 3,443
Other borrowed money 25,244 11,240 10,432
Accrued interest and other liabilities 4,357 4,180 4,561
Total Liabilities 536,552 530,519 496,552
SHAREHOLDERS' EQUITY:
Common stock, no par value - authorized 1,500,000
shares; issued 1,300,000 shares 12,677 12,677 12,677
Undivided profits 45,085 41,002 40,244
Accumulated other comprehensive income (291) 1,671 1,048
Total Shareholders' Equity 57,471 55,350 54,611
LIABILITIES AND SHAREHOLDERS' EQUITY $ 594,023 $ 585,869 $ 551,163
</TABLE>
See Notes to Condensed Consolidated Unaudited Financial Statements.
Note: The December 31, 1998 Balance Sheet has been derived from the audited
financial statements of that date.
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1
FARMERS & MERCHANTS BANCORP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(in thousands of dollars)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
Sept 30, 1999 Sept 30, 1998 Sept 30, 1999 Sept 30, 1998
<S> <C> <C> <C> <C>
INTEREST INCOME:
Loans and leases $ 9,427 $ 9,064 $ 26,756 $ 26,906
Investment Securities:
U.S. Treasury securities 140 281 583 957
Securities of U.S. Government agencies 746 585 2,370 1,539
Obligations of states and political subdivisions 409 407 1,254 1,097
Other 237 375 1,022 1,064
Federal funds 11 218 87 420
Deposits in banks 1 1 2 3
Total Interest Income 10,971 10,931 32,074 31,986
INTEREST EXPENSE:
Deposits 4,837 5,364 14,861 15,805
Borrowed funds 426 222 894 678
Total Interest Expense 5,263 5,586 15,755 16,483
NET INTEREST INCOME BEFORE
PROVISION FOR LOAN LOSSES 5,708 5,345 16,319 15,503
PROVISION FOR LOAN LOSSES 471 222 1,069 692
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 5,237 5,123 15,250 14,811
OTHER INCOME:
Service charges 400 337 1,114 980
Other 244 663 1,137 2,153
Net securities gains (losses) 11 - 31 -
655 1,000 2,282 3,133
OTHER EXPENSES:
Salaries and wages 1,562 1,444 4,527 3,946
Pension and other employee benefits 403 331 1,116 905
Occupancy expense (net) 155 134 390 379
Other operating expenses 1,175 1,339 4,303 3,920
3,295 3,248 10,336 9,150
INCOME BEFORE FEDERAL INCOME TAX 2,597 2,875 7,196 8,794
FEDERAL INCOME TAXES 769 800 1,941 2,546
NET INCOME 1,828 2,075 5,255 6,248
OTHER COMPREHENSIVE INCOME (NET OF TAX):
Unrealized gains (losses) on securities (425) 642 (1,538) 610
COMPREHENSIVE INCOME $ 1,403 $ 2,717 $ 3,717 $ 6,858
NET INCOME PER SHARE (Based upon
weighted average nmber of shares outstanding of 1,300,000 $ 1.41 $ 1.60 $ 4.04 $ 4.81
DIVIDENDS DECLARED $ 0.30 $ 0.30 $ 0.60 $ 0.60
</TABLE>
See Notes to Condensed Consolidated Unaudited Financial Statements.
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2
FARMERS & MERCHANTS BANCORP, INC.
CONDENSED CONSOLIDATED STATMENTS OF CASH FLOWS
(Unaudited)
(in thousands of dollars)
<TABLE>
<CAPTION>
Nine Months Ended
Sept 30, 1999 Sept 30, 1998
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 5,255 $ 6,248
Adjustments to Reconcile Net Income to Net
Cash Provided by Operating Activities:
Depreciation and amortization 925 536
Premium amortization 214 190
Discount amortization (38) (38)
Provision for loan losses 1,069 692
Provision for deferred income taxes (62) 20
(Gain) loss on sale of fixed assets 23 7
(Gain) loss on sale of investment securities (31) --
Changes in Operating Assets and Liabilities:
Accrued interest receivable and other assets (1,760) (190)
Accrued interest payable and other liabilities 177 320
Net Cash Provided by Operating Activities 5,772 7,785
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (1,273) (1,796)
Proceeds from sale of fixed assets -- --
Proceeds from maturities of investment securities: 28,054 15,411
Proceeds from sale of investment securities: 17,550 --
Purchase of investment securities- (27,719) (28,101)
Net increase in loans and leases (49,922) (6,167)
Net Cash Used by Investing Activities (33,310) (20,653)
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in deposits (20,665) 16,818
Net change in short-term borrowings 12,517 845
Increase in long-term borrowings -- --
Payments on long-term borrowings 14,004 (860)
Payments of dividends (1,170) (1,170)
Net Cash Provided by Financing Activities 4,686 15,633
Net change in cash and cash equivalents (22,852) 2,765
Cash and cash equivalents - Beginning of year 37,694 22,798
CASH AND CASH EQUIVALENTS - END OF THE YEAR $ 14,842 $ 25,563
RECONCILIATION OF CASH AND CASH EQUIVALENTS:
Cash and cash due from banks $ 14,742 $ 15,528
Interest bearing deposits 100 100
Federal funds sold -- 9,935
$ 14,842 $ 25,563
</TABLE>
See Notes to Condensed Consolidated Unaudited Financial Statements.
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3
FARMERS & MERCHANTS BANCORP, INC.
Notes to Condensed Consolidated Unaudited 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 nine months ended September
30, 1999 are not necessarily indicative of the results that are
expected for the year ended December 31, 1999. 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, 1998.
<PAGE> 7
4
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 nine months ended September 30, 1999 comes primarily
from net income from operations of $5.3 million This compares with net
income of $6.25 million for the same period in 1998. In addition the
excess in Federal Funds sold was used to help fund the additional loan
growth.
The principal uses of these funds were for granting loans. Loans as of
September 30, 1999 were $456.6 million compared to $407.7 million as of
December 31, 1998, a $45.9 million or 12% increase after
reclassification of $3.5 million of commercial paper from the loan
category to other investments. December 31, 1998 and September 30, 1998
loans and investments have been restated to reflect this change in
classification.
Capital expenditures amounted to $1.3 million for the first nine months
of 1999.
The following is a summary of five capital ratios as they are
calculated from the September 30, 1999 financial statements:
<TABLE>
<S> <C>
Primary Ratio 10.67%
Total Capital Ratio 14.87%
Risk Based Capital Tier 1 13.44%
Risk Based Capital Tier 2 20.89%
Stockholders' Equity/Total Assets 9.67%
</TABLE>
<PAGE> 8
5
PART II
ITEM 6 EXHIBIT 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, 1999
<PAGE> 9
6
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, theeunto duly authorized.
Farmers & Merchants Bancorp, Inc.,
Date: Nov 12, 1999 By: /s/ Joe E. Crossgrove
-----------------------
Joe E. Crossgrove
President and Cashier
Date: Nov 12, 1999 By: /s/ Randal H. Schroeder
------------------------
Randal H. Schroeder
Asst. Vice-President
and Chief Operating Officer
<PAGE> 10
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ------------ -----------
<S> <C>
Ex - 27 Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 14,742
<INT-BEARING-DEPOSITS> 100
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 103,917
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 456,574
<ALLOWANCE> 6,611
<TOTAL-ASSETS> 594,023
<DEPOSITS> 491,518
<SHORT-TERM> 15,433
<LIABILITIES-OTHER> 4,357
<LONG-TERM> 25,244
0
0
<COMMON> 12,677
<OTHER-SE> 44,794
<TOTAL-LIABILITIES-AND-EQUITY> 594,023
<INTEREST-LOAN> 26,756
<INTEREST-INVEST> 5,229
<INTEREST-OTHER> 89
<INTEREST-TOTAL> 32,074
<INTEREST-DEPOSIT> 14,861
<INTEREST-EXPENSE> 894
<INTEREST-INCOME-NET> 16,319
<LOAN-LOSSES> 1,069
<SECURITIES-GAINS> 31
<EXPENSE-OTHER> 10,336
<INCOME-PRETAX> 7,196
<INCOME-PRE-EXTRAORDINARY> 5,255
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,255
<EPS-BASIC> 4.04
<EPS-DILUTED> 4.04
<YIELD-ACTUAL> 0
<LOANS-NON> 7,731
<LOANS-PAST> 6,222
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 13,953
<ALLOWANCE-OPEN> 5,850
<CHARGE-OFFS> 1,324
<RECOVERIES> 709
<ALLOWANCE-CLOSE> 6,304
<ALLOWANCE-DOMESTIC> 6,304
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
