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SECURTIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
X Quarterly Report Pursuant to Section 13 or 15(d)
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of the Securities Exchange Act of 1934
For the quarterly period ended June 30, 2000
OR
Transition Report Pursuant to Section 13 or 15(d)
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of the Securities Exchange Act of 1934
For the transition period from to
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Commission File Number 0-14492
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FARMERS & MERCHANTS BANCORP, INC.
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(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.)
North Defiance Street, Archbold, Ohio 43502
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(Address of principal executive offices) (Zip Code)
(419) 446-2501
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Registrant's telephone number, including area code
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(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
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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
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Class Outstanding as of July 1, 2000
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10Q
FARMERS & MERCHANTS BANCORP, INC.
INDEX
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Form 10-Q Items Page
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets-
June 30, 2000, December 31, 1999 and June 30, 1999 1
Condensed Consolidated Statements of Net Earnings-
Three Months Ended June 30, 1999 and June 30, 2000 2
Condensed Consolidated Statements of Cash Flows-
Three Months Ended June 30, 1999 and June 30, 2000 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
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FARMERS & MERCHANTS BANCORP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands of dollars)
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June 30, 2000 December 31, 1999 June 30, 1999
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ASSETS:
Cash and due from banks $ 19,529 $ 17,245 $ 14,101
Interest bearing deposits with banks 100 100 100
Federal funds sold 0 - -
Investment Securities:
U.S. Treasury 6,930 6,842 10,956
U.S. Government 52,688 47,906 52,751
State & political obligations 29,707 31,246 33,453
All others 11,963 12,411 16,229
Loans and leases 478,098 463,947 425,285
Bank premises and equipment-net 10,024 10,176 9,491
Accrued interest and other assets 10,181 8,656 8,647
TOTAL ASSETS 619,220 $ 598,529 $ 571,013
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES:
Deposits:
Demand $ 39,300 $ 54,051 $ 46,541
Time and savings 456,243 449,115 444,063
Federal funds purchased and securities
sold under agreement to repurchase 22,284 7,343 8,968
Other borrowed money 36,619 25,039 10,846
Accrued interest and other liabilities 4,088 5,092 4,186
Total Liabilities 558,534 540,640 514,604
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 48,867 45,975 43,598
Accumulated other comprehensive income (858) (763) 134
Total Shareholders' Equity 60,686 57,889 56,409
LIABILITIES AND SHAREHOLDERS' EQUITY $619,220 $ 598,529 $ 571,013
</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)
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Three Months Ended Six Months Ended
June 30, 2000 June 30, 1999 June 30, 2000 June 30, 1999
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INTEREST INCOME:
Loans and leases $ 10,516 $ 8,827 $ 20,545 $ 17,329
Investment Securities:
U.S. Treasury securities 117 198 231 443
Securities of U.S. Government agencies 836 821 1,601 1,624
Obligations of states and political subdivisions 376 418 758 844
Other 206 304 491 785
Federal funds 1 9 67 75
Deposits in banks 1 1 2 2
Total Interest Income 12,053 10,578 23,695 21,102
INTEREST EXPENSE:
Deposits 5,302 4,852 10,545 10,024
Borrowed funds 883 243 1,416 469
Total Interest Expense 6,185 5,095 11,961 10,493
NET INTEREST INCOME BEFORE
PROVISION FOR LOAN LOSSES 5,868 5,483 11,734 10,609
PROVISION FOR LOAN LOSSES 394 183 561 598
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 5,474 5,300 11,173 10,011
OTHER INCOME:
Service charges 426 398 806 714
Other 326 378 712 893
Net securities gains (losses) - - 0 11
752 776 1,518 1,618
OTHER EXPENSES:
Salaries and wages 1,636 1,503 3,299 2,966
Pension and other employee benefits 363 354 738 713
Occupancy expense (net) 222 155 216 263
Other operating expenses 1,507 1,586 3,059 3,128
3,728 3,598 7,312 7,070
INCOME BEFORE FEDERAL INCOME TAX 2,498 2,478 5,379 4,559
FEDERAL INCOME TAXES 819 627 1,577 1,172
NET INCOME 1,679 1,851 3,802 3,387
OTHER COMPREHENSIVE INCOME (NET OF TAX):
Unrealized gains (losses) on securities 149 (723) (96) (1,538)
COMPREHENSIVE INCOME $ 1,828 $ 1,128 $ 3,706 $ 1,849
NET INCOME PER SHARE (Based upon
weighted average number of shares outstanding of 1,300,000 $ 1.29 $ 1.42 $ 2.92 $ 2.61
DIVIDENDS DECLARED $ 0.35 $ 0.30 $ 0.70 $ 0.60
</TABLE>
See Notes to Condensed Consolidated Unaudited Financial Statements.
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2
FARMERS & MERCHANTS BANCORP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands of dollars)
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Six Months Ended
June 30, 2000 June 30, 1999
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 3,802 $ 1,498
Adjustments to Reconcile Net Income to Net
Cash Provided by Operating Activities:
Depreciation and amortization 549 304
Premium amortization 122 8
Discount amortization (47) 34
Provision for loan losses 561 416
Provision for deferred income taxes (124) (9)
(Gain) loss on sale of fixed assets 1 -
(Gain) loss on sale of investment securities - -
Changes in Operating Assets and Liabilities:
Accrued interest receivable and other assets (1,401) (887)
Accrued interest payable and other liabilities (1,004) 88
Net Cash Provided by Operating Activities 2,459 1,452
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (398) (518)
Proceeds from sale of fixed assets - -
Proceeds from maturities of investment securities: 7,953 20,137
Proceeds from sale of investment securities: - -
Purchase of investment securities- (11,006) (25,092)
Net increase in loans and leases (14,712) (4,275)
Net Cash Used by Investing Activities (18,163) (9,748)
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in deposits (7,623) (20,380)
Net change in short-term borrowings 14,941 5,078
Increase in long-term borrowings - -
Payments on long-term borrowings 11,580 (196)
Payments of dividends (910) (390)
Net Cash Provided by Financing Activities 17,988 (15,888)
Net change in cash and cash equivalents 2,284 (24,184)
Cash and cash equivalents - Beginning of year 17,345 37,694
CASH AND CASH EQUIVALENTS - END OF THE YEAR $ 19,629 $ 13,510
RECONCILIATION OF CASH AND CASH EQUIVALENTS:
Cash and cash due from banks $ 19,529 $ 13,407
Interest bearing deposits 100 100
Federal funds sold - -
$ 19,629 $ 13,507
</TABLE>
See Notes to Condensed Consolidated Unaudited Financial Statements.
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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 six months ended June 30, 2000
are not necessarily indicative of the results that are
expected for the year ended December 31, 2000. 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, 1999.
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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 three months ended June 30, 2000 comes primarily
from net income from operations of $3.80 million. This compares
with net income of $3.39 million for the same period in 1999. In
addition, funds were purchased from correspondents, and the
Federal Home Loan Bank.
The principal uses of these funds were for granting loans. Loans
as of June 30, 2000 were $478.1 million compared to $463.95
million as of December 31, 1999, a $14.2 million or 0.3% increase
after reclassification of $1 million of commercial paper from the
loan category to other investments. December 31, 1999 and June 30,
1999 loans and investments have been restated to reflect this
change in classification.
The following is a summary of five capital ratios as they are
calculated from the September 30, 1999 financial statements:
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Primary Ratio 10.79%
Total Capital Ratio 16.64%
Risk Based Capital Tier 1 13.66%
Risk Based Capital Tier 2 23.46%
Stockholders' Equity/Total Assets 9.80%
</TABLE>
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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 June 30, 2000
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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, thereunto duly authorized.
Farmers & Merchants Bancorp, Inc.,
Date: August 10, 2000 By: /s/ Joe E. Crossgrove
Joe E. Crossgrove
President and Cashier
Date: August 10, 2000 By: /s/ Randal H. Schroeder
Randal H. Schroeder
Asst. Vice-President
and Chief Operating Officer
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EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
27 Financial Data Schedule
