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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 March 31, 2000 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 0-14492 ----------------------------- 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 - -------------------------------------------------------------------------------- (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 April 1, 2000
2 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10Q FARMERS & MERCHANTS BANCORP, INC. INDEX Form 10-Q Items Page - --------------- PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Condensed Consolidated Balance Sheets- March 31, 2000, December 31, 1999 and March 31, 2000 1 Condensed Consolidated Statements of Net Earnings- Three Months Ended March 31, 1999 and March 31, 2000 2 Condensed Consolidated Statements of Cash Flows- Three Months Ended March 31, 1999 and March 31, 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
3 FARMERS & MERCHANTS BANCORP, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (in thousands of dollars) March 31, 2000 December 31, 1999 March 31, 1999 ASSETS: Cash and due from banks $ 16,431 $ 17,245 $ 13,407 Interest bearing deposits with banks 100 100 100 Federal funds sold 0 - - Investment Securities: U.S. Treasury 7,443 6,842 15,096 U.S. Government 54,963 47,906 54,298 State & political obligations 30,263 31,246 34,485 All others 12,907 12,411 24,135 Loans and leases 466,085 463,947 411,580 Bank premises and equipment-net 10,118 10,176 9,644 Accrued interest and other assets 9,759 8,656 8,009 TOTAL ASSETS $ 608,069 $ 598,529 $ 570,754 LIABILITIES AND SHAREHOLDERS' EQUITY LIABILITIES: Deposits: Demand $ 39,351 $ 54,051 $ 41,699 Time and savings 459,474 449,115 450,104 Federal funds purchased and securities sold under agreement to repurchase 20,554 7,343 7,994 Other borrowed money 24,831 25,039 11,044 Accrued interest and other liabilities 4,684 5,092 4,268 Total Liabilities 548,894 540,640 515,109 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 47,506 45,975 42,111 Accumulated other comprehensive income (1,007) (763) 857 Total Shareholders' Equity 59,176 57,889 55,645 LIABILITIES AND SHAREHOLDERS' EQUITY $ 608,070 $ 598,529 $ 570,754 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. 1
4 FARMERS & MERCHANTS BANCORP, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (in thousands of dollars) Three Months Ended Three Months Ended Sept 30, 1999 Sept 30, 1998 March 31, 2000 36,250.00 INTEREST INCOME: Loans and leases $ - $ - $ 10,029 $ 8,502 Investment Securities: U.S. Treasury securities - - 114 245 Securities of U.S. Government agencies - - 765 803 Obligations of states and political subdivisions - - 382 426 Other - - 286 480 Federal funds - - 66 66 Deposits in banks - - 0 1 Total Interest Income - - 11,642 10,523 INTEREST EXPENSE: Deposits - - 5,243 5,172 Borrowed funds - - 533 226 Total Interest Expense - - 5,776 5,398 NET INTEREST INCOME BEFORE PROVISION FOR LOAN LOSSES - - 5,866 5,125 PROVISION FOR LOAN LOSSES - - 167 416 NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES - - 5,699 4,709 OTHER INCOME: Service charges - - 381 316 Other - - 386 515 Net securities gains (losses) - - 0 - - - 767 831 OTHER EXPENSES: Salaries and wages - - 1,662 1,463 Pension and other employee benefits - - 375 359 Occupancy expense (net) - - 130 133 Other operating expenses - - 1,552 1,542 - - 3,719 3,497 INCOME BEFORE FEDERAL INCOME TAX - - 2,747 2,043 FEDERAL INCOME TAXES - - 758 545 NET INCOME - - 1,989 1,498 OTHER COMPREHENSIVE INCOME (NET OF TAX): Unrealized gains (losses) on securities - - (1,538) (814) COMPREHENSIVE INCOME $ - $ - $ 451 $ 684 NET INCOME PER SHARE (Based upon weighted average number of shares outstanding of 1,300,000 $ - $ - $ 1.53 $ 1.15 DIVIDENDS DECLARED $ - $ - $ 0.35 $ 0.30 See Notes to Condensed Consolidated Unaudited Financial Statements. 2
5 FARMERS & MERCHANTS BANCORP, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands of dollars) Three Months Ended March 31, 2000 March 31, 1999 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 1,989 $ 1,498 Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: Depreciation and amortization 274 304 Premium amortization 21 8 Discount amortization (2) 34 Provision for loan losses 167 416 Provision for deferred income taxes - (9) (Gain) loss on sale of fixed assets - - (Gain) loss on sale of investment securities - - Changes in Operating Assets and Liabilities: Accrued interest receivable and other assets (1,103) (887) Accrued interest payable and other liabilities (408) 88 Net Cash Provided by Operating Activities 938 1,452 CASH FLOWS FROM INVESTING ACTIVITIES Capital expenditures (216) (518) Proceeds from sale of fixed assets - - Proceeds from maturities of investment securities: 2,299 20,137 Proceeds from sale of investment securities: - - Purchase of investment securities- (9,737) (25,092) Net increase in loans and leases (2,305) (4,275) Net Cash Used by Investing Activities (9,959) (9,748) CASH FLOWS FROM FINANCING ACTIVITIES Net increase in deposits (4,341) (20,380) Net change in short-term borrowings 13,211 5,078 Increase in long-term borrowings - - Payments on long-term borrowings (208) (196) Payments of dividends (455) (390) Net Cash Provided by Financing Activities 8,207 (15,888) Net change in cash and cash equivalents (814) (24,184) Cash and cash equivalents - Beginning of year 17,345 37,694 CASH AND CASH EQUIVALENTS - END OF THE YEAR $ 16,531 $ 13,510 RECONCILIATION OF CASH AND CASH EQUIVALENTS: Cash and cash due from banks $ 16,431 $ 13,407 Interest bearing deposits 100 100 Federal funds sold - - $ 16,531 $ 13,507 See Notes to Condensed Consolidated Unaudited Financial Statements. 3
6 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 March 31, 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. 4
7 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, 2000 comes primarily from net income from operations of $1.99 million. This compares with net income of $1.50 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 March 31, 2000 were $466.08 million compared to $463.95 million as of December 31, 1999, a $45.9 million or 0.5% increase after reclassification of $1 million of commercial paper from the loan category to other investments. December 31, 1999 and September 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: Primary Ratio 10.73% Total Capital Ratio 14.77% Risk Based Capital Tier 1 13.64% Risk Based Capital Tier 2 20.92% Stockholders' Equity/Total Assets 9.73% 5
8 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 6
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, theeunto duly authorized. Farmers & Merchants Bancorp, Inc., Date: May 10, 2000 By: /s/ Joe E. Crossgrove ------------------------- Joe E. Crossgrove President and Cashier Date: May 10, 2000 By: /s/ Randal H. Schroeder ------------------------- Randal H. Schroeder Asst. Vice-President and Chief Operating Officer 7
10 EXHIBIT INDEX EXHIBIT NO. DESCRIPTION 27 Financial Data Schedule 8
9 1,000 3-MOS DEC-31-2000 JAN-01-2000 MAR-31-2000 16,431 100 0 0 105,576 0 0 466,085 6,800 608,069 498,825 20,554 4,684 24,831 0 0 12,677 46,499 608,070 10,029 1,547 66 11,642 5,243 533 5,866 167 0 3,719 2,747 1,989 0 0 1,989 1.53 1.53 0 7,731 6,222 0 13,953 6,750 337 220 6,800 6,800 0 0