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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 June 30, 2001
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
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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 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, 2001
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10Q
FARMERS & MERCHANTS BANCORP, INC.
INDEX
Form 10-Q Items Page
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets-
June 30, 2001, December 31, 2000 and June 30, 2000 1
Condensed Consolidated Statements of Net Earnings-
Six Months Ended June 30, 2000 and June 30, 2001 2
Condensed Consolidated Statements of Cash Flows-
Six Months Ended June 30, 2000 and June 30, 2001 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)
June 30, 2001 December 31, 2000 June 30, 2000
ASSETS:
Cash and due from banks $ 21,337 $ 17,951 $ 19,529
Interest bearing deposits with banks 100 100 100
Federal funds sold 20,535 370 -
Investment Securities:
U.S. Treasury 7,784 7,921 6,930
U.S. Government 80,354 61,057 52,688
State & political obligations 35,173 32,157 29,707
All others 8,918 15,097 11,963
Loans and leases 460,490 480,645 478,098
Bank premises and equipment-net 11,530 10,354 10,024
Accrued interest and other assets 10,370 9,508 10,181
TOTAL ASSETS $ 656,591 $ 635,160 $ 619,220
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES:
Deposits:
Demand $ 36,052 $ 40,729 $ 39,300
Time and savings 509,652 475,734 456,243
Federal funds purchased and securities
sold under agreement to repurchase 19,585 18,903 22,284
Other borrowed money 18,339 30,786 36,619
Accrued interest and other liabilities 3,871 4,020 4,088
Total Liabilities 587,499 570,172 558,534
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 54,588 51,416 48,867
Accumulated other comprehensive income 1,827 895 (858)
Total Shareholders' Equity 69,092 64,988 60,686
LIABILITIES AND SHAREHOLDERS' EQUITY $ 656,591 $ 635,160 $ 619,220
See Notes to Condensed Consolidated Unaudited Financial Statements.
Note: The December 31, 2000 Balance Sheet has been derived from the audited
financial statements of that date.
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FARMERS & MERCHANTS BANCORP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(in thousands of dollars)
Three Months Ended Six Months Ended
June 30, 2001 June 30, 2000 June 30, 2001 June 30, 2000
INTEREST INCOME:
Loans and leases $10,652 $ 8,827 $21,474 $20,545
Investment Securities:
U.S. Treasury securities 121 198 245 231
Securities of U.S. Government agencies 1,044 821 2,013 1,601
Obligations of states and political subdivisions 422 418 809 758
Other 178 304 398 491
Federal funds 203 9 363 67
Deposits in banks 66 1 95 2
Total Interest Income 12,686 10,578 25,397 23,695
INTEREST EXPENSE:
Deposits 5,958 4,852 11,996 10,545
Borrowed funds 583 243 1,430 1,416
Total Interest Expense 6,541 5,095 13,426 11,961
NET INTEREST INCOME BEFORE
PROVISION FOR LOAN LOSSES 6,145 5,483 11,971 11,734
PROVISION FOR LOAN LOSSES 486 183 670 561
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 5,659 5,300 11,301 11,173
OTHER INCOME:
Service charges 471 398 909 806
Other 859 378 1,420 712
Net securities gains (losses) 153 - 204 -
1,483 776 2,533 1,518
OTHER EXPENSES:
Salaries and wages 1,768 1,503 3,552 3,299
Pension and other employee benefits 407 354 871 738
Occupancy expense (net) 252 155 237 216
Other operating expenses 1,733 1,586 3,408 3,059
4,160 3,598 8,068 7,312
INCOME BEFORE FEDERAL INCOME TAX 2,982 2,478 5,766 5,379
FEDERAL INCOME TAXES 851 627 1,683 1,577
NET INCOME 2,131 1,851 4,083 3,802
OTHER COMPREHENSIVE INCOME (NET OF TAX):
Unrealized gains (losses) on securities 184 149 932 (96)
COMPREHENSIVE INCOME $ 2,315 $ 2,000 $ 5,015 $ 3,706
NET INCOME PER SHARE (Based upon
weighted average number of shares outstanding $ 1.64 $ 1.42 $ 3.14 $ 2.92
of 1,300,000
DIVIDENDS DECLARED $ 0.35 $ 0.30 $ 0.70 $ 0.70
See Notes to Condensed Consolidated Unaudited Financial Statements.
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FARMERS & MERCHANTS BANCORP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands of dollars)
Six Months Ended
June 30, 2001 June 30, 2000
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 4,083 $ 3,802
Adjustments to Reconcile Net Income to Net
Cash Provided by Operating Activities:
Depreciation and amortization 568 549
Premium amortization 142 122
Discount amortization (80) (47)
Provision for loan losses 670 561
Provision for deferred income taxes (88) (124)
(Gain) loss on sale of fixed assets 11 1
(Gain) loss on sale of investment securities (204) -
Changes in Operating Assets and Liabilities:
Accrued interest receivable and other assets (774) (1,401)
Accrued interest payable and other liabilities (149) (1,004)
Net Cash Provided by Operating Activities 4,179 2,459
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (1,755) (398)
Proceeds from sale of fixed assets - -
Proceeds from maturities of investment securities: 19,451 7,953
Proceeds from sale of investment securities: 2,105 -
Purchase of investment securities- (36,300) (11,006)
Net increase in loans and leases 19,485 (14,712)
Net Cash Used by Investing Activities 2,986 (18,163)
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in deposits 29,241 (7,623)
Net change in short-term borrowings 682 14,941
Increase in long-term borrowings - -
Payments on long-term borrowings (12,447) 11,580
Payments of dividends (910) (910)
Net Cash Provided by Financing Activities 16,566 17,988
Net change in cash and cash equivalents 23,731 2,284
Cash and cash equivalents - Beginning of year 18,241 17,345
CASH AND CASH EQUIVALENTS - END OF THE YEAR $ 41,972 $ 19,629
RECONCILIATION OF CASH AND CASH EQUIVALENTS:
Cash and cash due from banks $ 21,337 $ 19,529
Interest bearing deposits 100 100
Federal funds sold 20,535 -
$ 41,972 $ 19,629
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, 2001
are not necessarily indicative of the results that are
expected for the year ended December 31, 2001. 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, 2000.
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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 six months ended June 30, 2001 comes primarily from
net income from operations of $4.1 million. This compares with net
income of $3.8 million for the same period in 2000. In addition, funds
were purchased from correspondents, and the Federal Home Loan Bank.
During the quarter loan balances were reduced by 20.1 million. This was
primarily due to the payoff of several participation loans with another
institution, and also the refinancing of variable rate mortgages that
were on the banks books into fixed rate loans that were sold on the
secondary market. This also added substantially to the banks liquidity
position as is reflected by the amount of federal funds sold.
The following is a summary of five capital ratios as they are
calculated from the June 30, 2001 financial statements:
Primary Ratio 11.58%
Total Capital Ratio 14.37%
Risk Based Capital Tier 1 14.80%
Risk Based Capital Tier 2 20.29%
Stockholders' Equity/Total Assets 10.59%
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PART II
EXHIBIT AND REPORTS ON FORM 8-K
ITEM 6
(A)
The following documents are filed as part of this report:
None
(B)
Reports on Form 8-K
No reports on Form 8-K were filed by the registrant during
the quarter ended September 30, 2000
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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: Aug 10, 2001 By: /s/ Joe E. Crossgrove
Joe E. Crossgrove
President and Cashier
Date: August 10, 2001 By: /s/ Randal H. Schroeder
Randal H. Schroeder
Asst. Vice-President
and Chief Operating Officer
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