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1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For three months ended March 31, 1996 Commission file number 014492 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 43502 - --------------------------------- ------------------------------ (Address of principal executive (Zip Code) offices) Registrant's Telephone Number, including area code 419/446-2501 ------------ Not applicable --------------------------------------------------------------- Former name, former address, and former fiscal year, if changed since last year Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter periods 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 lastest practicable date: Class Outstanding as of March 31, 1996 - --------------------------------- ------------------------------------------ Common Stock, No Par Value 260,000
2 SECURITES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q FARMERS & MERCHANTS BANKCORP, INC. INDEX Form 10-Q Items Page # - --------------- ------------ PART I. FINANCIAL INFORMATION Item 1. Financial statements (unaudited) Condensed consolidated balance sheets -- March 31, 1996 and December 31, 1995 1 Condensed consolidated statements of net earnings -- three months ended March 31, 1996 and March 31, 1995 2 Condensed consolidated statements of cash flows -- three months ended March 31, 1996 and March 31, 1995 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 8-K 6 SIGNATURES 7
3 FARMERS & MERCHANTS BANCORP, INC. ARCHBOLD, OHIO CONDENSED CONSOLIDATED BALANCE SHEET (In thousands of dollars) Quarter Ended Market Value Year Ended Market Value Quarter Ended March 3 March 31 December 31 December 31 March 31 ASSETS 1996 1996 1995 1995 1995 - ------ ------------- ------------ ----------- ------------ ------------- Cash and due from banks $ 11,996 $ 14,951 $ 12,945 Interest bearing deposits in other banks 145 100 145 Federal Funds Sold & Securities Purchased Under Agreement to Resell 14,335 10,710 360 Investment Securities U. S. Treasury 22,719 22,719 22,757 22,757 16,806 U. S. Government Agencies 34,475 34,475 31,237 31,237 25,958 State & Political Subdivisions 21,464 21,464 19,926 19,926 17,924 All Others 10,777 10,777 10,795 10,795 9,285 Loans and leases 349,205 339,676 309,607 Bank premises and equipment 7,216 7,198 6,952 Accrued interest and other assets 7,241 6,740 6,867 -------- ------- -------- ------- -------- TOTAL ASSETS $479,573 $89,435 $464,090 $84,715 $406,849 - ------------ ======== ======= ======== ======= ======== LIABILITIES AND SHAREHOLDERS' EQUITY - ------------------------------------ LIABILITIES - ----------- Deposits: Demand $ 35,873 $ 37,436 $ 27,744 Time and savings 383,824 366,554 323,262 Federal Funds Purchased & Securities Sold Under Agreement to Repurchase 6,450 6,919 6,819 Other Borrowed Money 9,523 9,662 9,726 Accrued interest and other liabilities 3,710 3,898 3,287 -------- ------- -------- ------- -------- TOTAL LIABILITIES 439,380 0 424,469 0 370,838 - ----------------- -------- ------- -------- ------- -------- SHAREHOLDERS' EQUITY - -------------------- Common Stock, no par value - Authorized 300,000 shares; issued 260,000 shares in 1993 & 1992 12,677 12,677 12,677 Undivided profits 27,516 26,944 23,334 -------- ------- -------- ------- -------- TOTAL SHAREHOLDERS' EQUITY 40,193 0 39,621 0 36,011 - -------------------------- -------- ------- -------- ------- -------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $479,573 $0 $464,090 $0 $406,849 - ------------------------------------------ ======== ======= ======== ======= ======== See notes to condensed consolidated unaudited financial statements Note: The balance sheet at December 31, 1995 has been derived from the audited financial statements of that date. 1
4 FARMERS & MERCHANTS BANCORP, INC. CONDENSED CONSOLIDATED STATEMENTS OF NET EARNINGS (In thousands of dollars) Three Months Ended March 30 1996 1995 ------ ------ INTEREST INCOME: Loans and leases $7,971 $6,524 Investment Securities U. S. Treasury 315 218 U. S. Gov't Agencies 496 429 States & Political Subdiv. 287 284 Other 159 136 Federal funds sold 167 71 Deposits with other banks 0 0 ------ ------ Total Interest Income 9,395 7,662 ------ ------ INTEREST EXPENSE: Deposits 4,888 3,460 Short-term borrowings 90 116 Other borrowed money 152 179 ------ ------ Total Interest Expense 5,130 3,755 ------ ------ NET INTEREST INCOME 4,265 3,907 PROVISION FOR LOAN LOSSES 145 0 ------ ------ NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 4,120 3,907 OTHER INCOME: Service charges 259 228 Other 380 238 Securities gains (losses) 0 (12) ------ ------ 639 454 ------ ------ OTHER EXPENSE: Salaries 1,203 938 Pension and Employee Benefits 232 175 Occupancy 349 281 Other operating 886 1,037 ------ ------ 2,670 2,431 ------ ------ EARNINGS BEFORE INCOME TAX 2,089 1,930 PROVISION FOR FEDERAL INCOME TAX 606 564 ------ ------ NET EARNINGS $1,483 $1,366 ====== ====== Net income per share (Based upon the weighted average number of shares outstanding of 260,000 for 1996 and 1995) 5.70 5.25 ====== ====== 2
5 Farmers and Merchants Bancorp, Inc. Cash Flows From Operating Activities (In Thousands) Mar 31 Mar 31 1996 1995 ------ ------ Net Earnings 1,483 1,366 Adj To Reconcile Net Earnings to Cash provided by Operating activities Depreciation and Amortization 198 150 Premium Amortization 161 32 Discount Amortization (39) (213) Provision for Loan Losses 145 0 Provision for Deferred Taxes 87 23 (Gain)Loss on Sale of Fixed Assets 0 0 (Gain)Loss on Sale of Securities 0 12 Changes in Assets and Liabilities Accrued Int Receivable & Other Assets (415) (620) Accrued Int Payable & Other Liabilities 136 614 Net Cash Provided By Operating Act 1,756 1,364 Cash Flows from Investing Activities Capital Expenditures (216) (845) Proceeds from Sale of Fixed Assets 0 0 Proceeds from Sale of Securities 0 0 Proceeds from Maturities of Securities 0 7,745 Purchase of Securities (4,358) 0 Net (Increase)Decrease in Loans (9,538) (8,026) Net (Increase)Decrease in Leases 9 (1) Net Cash Used by Investing Activities (14,103) (1,127) Cash Flows from Financing Activities Net Increase(Decrease) in Deposits 15,707 6,942 Net Increase(Decrease) in Short Term Borrowings (469) (7,579) Net Increase in Long Term Borrowings 0 0 Payments on Long Term Borrowings (139) (149) Payments of Dividends (650) (520) Unrealized Gains/Losses on Securities (387) 67 Net Cash Provided by Financing Act 14,062 (1,239) Net Change in Cash & Cash Equivelants 1,715 (1,002) Cash & Cash Equivelants at Beginning of Year 24,761 14,452 Cash & Cash Equivelants at end of year 26,476 13,450 Reconcilements of Cash & Cash Equivalents Cash and Due from Banks 11,996 12,945 Interest Bearing Deposits 145 145 Federal Funds Sold 14,335 360 Total Cash and Cash Equivelants 26,476 13,450 3
6 FARMERS & MERCHANTS BANCORP, INC. Notes to Condensed Consolidated 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 10-Q and rule 10-1 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 three months ended March 31, 1996 are not necessarily indicative of the results that are expected for the year ended December 31, 1996. 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, 1995. 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 and Merchants Bancorp, Inc., and its subsidiary, The Farmers & Merchants State Bank are engaged only in commercial banking. The executive officers of Farmers & Merchants Bancorp, Inc., are located at 307-11 North Defiance Street, Archbold Ohio 43502. LIQUIDITY AND CAPITAL RESOURCES Liquidity has continued to be enhanced by the generation of cash through operations primarily be reduction in expenses, and the collection of interest income from productive assets. The rate of increase on Capital Expenditures has slowed with the completion of the renovation of the main office and the implementation of the new proof system. There will be reasonable increase in this area due to the major renovation of one of the branch offices. The following is a list of 5 capital ratios as they are calculated from the March 31, 1996 financial statements. Primary Ratio 9.42% Total Capital Ratio 11.38% Risk Based Capital Tier 1 8.27% Risk Based Capital Tier 2 11.36% Stockholders Equity/Total Assets 8.38% During the first three months of 1996 the bank's loan portfolio has increased $9,529,000. This represents a 3% increase. This was the primary use of cash over the period. An increase of $15,707,000 in deposits was noted at the quarter ended March 31, 1996. This represents a 4% increase. This increase was do in part to the fact that the bank offers very competitive rates for its deposit products. In addition a concerted marketing effort has been impletmented to attract more "core" deposits to help with the maintaining of an acceptable net interest margin. 5
8 PART II OTHER INFORMATION ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K (a) Listing of Exhibits (numbered as in Item 601 of Regulation S-K): 27. Financial Data Schedule. (b) The Company has filed no reports on Form 8-K during the quarter ended March 31, 1996. 6
9 SIGNATURES ---------- Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Farmers & Merchants Bancorp, Inc. Date: May 9, 1996 By: /s/ Joe E. Crossgrove ------------------------------ Joe E. Crossgrove Executive Vice President and Cashier Date: May 9, 1996 By: /s/ Randal H. Schroeder ------------------------------ Randal H. Schroeder Asst. Vice President and Chief Accounting Officer 7
10 EXHIBIT INDEX EXHIBIT NO. DESCRIPTION - ----------- ----------- 27 Financial Data Schedule
9 3-MOS DEC-31-1996 MAR-31-1996 11,996 145 14,335 0 0 0 89,435 349,205 5,500 479,573 419,697 6,450 3,710 9,523 0 0 12,677 27,516 40,193 7,971 1,257 167 9,395 4,888 5,130 4,265 145 0 2,670 639 0 0 0 2,089 5.70 5.70 8.38 3,377 3,257 0 6,634 5,500 312 167 5,500 145 0 5,500