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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 September 30, 2000 OR Transition Report Pursuant to Section 13 or 15(d) --- of the Securities Exchange Act of 1934 For the transition period from to -------- -------- Commision 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 October 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- September 30, 2000, December 31, 1999 and September 30, 1999 1 Condensed Consolidated Statements of Net Earnings- Nine Months Ended September 30, 1999 and September 30, 2000 2 Condensed Consolidated Statements of Cash Flows- Nine Months Ended September 30, 1999 and September 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
3 FARMERS & MERCHANTS BANCORP, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (in thousands of dollars) Sept 30, 2000 December 31, 1999 Sept 30, 1999 ASSETS: Cash and due from banks $ 17,829 $ 17,245 $ 14,742 Interest bearing deposits with banks 100 100 100 Federal funds sold 0 - - Investment Securities: U.S. Treasury 7,987 6,842 6,958 U.S. Government 56,431 47,906 48,440 State & political obligations 29,107 31,246 32,634 All others 12,077 12,411 15,885 Loans and leases 482,998 463,947 456,574 Bank premises and equipment-net 10,410 10,176 9,755 Accrued interest and other assets 10,479 8,656 8,935 TOTAL ASSETS $ 627,418 $ 598,529 $ 594,023 LIABILITIES AND SHAREHOLDERS' EQUITY LIABILITIES: Deposits: Demand $ 41,792 $ 54,051 $ 42,950 Time and savings 465,574 449,115 448,568 Federal funds purchased and securities sold under agreement to repurchase 21,687 7,343 15,433 Other borrowed money 31,004 25,039 25,244 Accrued interest and other liabilities 4,723 5,092 4,357 Total Liabilities 564,780 540,640 536,552 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 50,199 45,975 45,085 Accumulated other comprehensive income (238) (763) (291) Total Shareholders' Equity 62,638 57,889 57,471 LIABILITIES AND SHAREHOLDERS' EQUITY $ 627,418 $ 598,529 $ 594,023 See Notes to Condensed Consolidated Unaudited Financial Statements. Note: The December 31, 1999 Balance Sheet has been derived from the audited financial statements of that date.
4 1 FARMERS & MERCHANTS BANCORP, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (in thousands of dollars) Three Months Ended Nine Months Ended Sept 30, 2000 Sept 30, 1999 Sept 30, 2000 Sept 30, 1999 INTEREST INCOME: Loans and leases $ 10,872 $ 9,427 $ 31,417 $ 26,756 Investment Securities: U.S. Treasury securities 125 140 356 583 Securities of U.S. Government agencies 832 746 2,433 2,370 Obligations of states and political subdivisions 357 409 1,116 1,254 Other 190 237 681 1,022 Federal funds 44 11 110 87 Deposits in banks 1 1 3 2 Total Interest Income 12,421 10,971 36,116 32,074 INTEREST EXPENSE: Deposits 5,763 4,837 16,308 14,861 Borrowed funds 892 426 2,308 894 Total Interest Expense 6,655 5,263 18,616 15,755 NET INTEREST INCOME BEFORE PROVISION FOR LOAN LOSSES 5,766 5,708 17,500 16,319 PROVISION FOR LOAN LOSSES 630 471 1,093 1,069 NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 5,136 5,237 16,407 15,250 OTHER INCOME: Service charges 472 400 1,278 1,114 Other 380 244 1,092 1,137 Net securities gains (losses) - 11 0 31 852 655 2,370 2,282 OTHER EXPENSES: Salaries and wages 1,687 1,562 4,986 4,527 Pension and other employee benefits 415 403 1,153 1,116 Occupancy expense (net) 225 155 325 390 Other operating expenses 1,472 1,175 4,531 4,303 3,799 3,295 10,995 10,336 INCOME BEFORE FEDERAL INCOME TAX 2,189 2,597 7,782 7,196 FEDERAL INCOME TAXES 615 769 2,192 1,941 NET INCOME 1,574 1,828 5,590 5,255 OTHER COMPREHENSIVE INCOME (NET OF TAX): Unrealized gains (losses) on securities 620 (425) (96) (1,538) COMPREHENSIVE INCOME $ 2,194 $ 1,403 $ 5,494 $ 3,717 NET INCOME PER SHARE (Based upon weighted average nmber of shares outstanding of 1,300,000 $ 1.21 $ 1.41 $ 4.30 $ 4.04 DIVIDENDS DECLARED $ 0.35 $ 0.30 $ 1.05 $ 0.90 See Notes to Condensed Consolidated Unaudited Financial Statements.
5 2 FARMERS & MERCHANTS BANCORP, INC. CONDENSED CONSOLIDATED STATMENTS OF CASH FLOWS (Unaudited) (in thousands of dollars) Three Months Ended Sept 30, 2000 Sept 30, 1999 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 5,590 $ 5,255 Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: Depreciation and amortization 825 925 Premium amortization 139 214 Discount amortization (50) (38) Provision for loan losses 1,093 1,069 Provision for deferred income taxes (119) (62) (Gain) loss on sale of fixed assets 17 23 (Gain) loss on sale of investment securities - (31) Changes in Operating Assets and Liabilities: Accrued interest receivable and other assets (1,704) (1,760) Accrued interest payable and other liabilities (369) 177 Net Cash Provided by Operating Activities 5,422 5,772 CASH FLOWS FROM INVESTING ACTIVITIES Capital expenditures (1,076) (1,273) Proceeds from sale of fixed assets - - Proceeds from maturities of investment securities: 11,073 28,054 Proceeds from sale of investment securities: - 17,550 Purchase of investment securities- (17,835) (27,719) Net increase in loans and leases (20,144) (49,922) Net Cash Used by Investing Activities (27,982) (33,310) CASH FLOWS FROM FINANCING ACTIVITIES Net increase in deposits 4,200 (20,665) Net change in short-term borrowings 14,344 12,517 Increase in long-term borrowings - - Payments on long-term borrowings 5,965 14,004 Payments of dividends (1,365) (1,170) Net Cash Provided by Financing Activities 23,144 4,686 Net change in cash and cash equivalents 584 (22,852) Cash and cash equivalents - Beginning of year 17,345 37,694 CASH AND CASH EQUIVALENTS - END OF THE YEAR $ 17,929 $ 14,842 RECONCILIATION OF CASH AND CASH EQUIVALENTS: Cash and cash due from banks $ 17,829 $ 14,742 Interest bearing deposits 100 100 Federal funds sold - - $ 17,929 $ 14,842 See Notes to Condensed Consolidated Unaudited Financial Statements.
6 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, 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.
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, 2000 comes primarily from net income from operations of $5.19 millon. This compares with net income of $5.26 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 September 30, 2000 were $483 million compared to $463.95 million as of December 31, 1999, a $19.1 million or 4% increase. The following is a summary of five capital ratios as they are calculated from the September 30, 1999 financial statements: Primary Ratio 11.00% Total Capital Ratio 15.89% Risk Based Capital Tier 1 13.97% Risk Based Capital Tier 2 22.50% Stockholders' Equity/Total Assets 9.98%
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, 2000
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: November 10, 2000 By: /s/ Joe E. Crossgrove Joe E. Crossgrove President and Cashier Date: November 10, 2000 By: /s/ Randal H. Schroeder Randal H. Schroeder Asst. Vice-President and Chief Operating Officer
10 7 EXHIBIT INDEX EXHIBIT NO. DESCRIPTION 27 Financial Data Schedule
9 9-MOS DEC-31-2000 JAN-01-2000 SEP-30-2000 17,829 100 0 0 105,602 0 0 482,998 7,196 627,418 507,366 21,687 4,723 31,004 0 0 12,677 49,961 627,418 31,417 4,586 113 36,116 16,308 2,308 17,500 1,093 0 10,995 7,782 5,590 0 0 5,590 4.30 4.30 0 6,588 10,898 0 17,486 6,750 1,100 425 7,168 7,168 0 0