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, 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 ------------------------------ 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, 2001
SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q FARMERS & MERCHANTS BANCORP, INC. INDEX <TABLE> <CAPTION> Form 10-Q Items Page - --------------- <S> <C> <C> PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Condensed Consolidated Balance Sheets- September 30, 2001, December 31, 2000 and September 30, 2000 1 Condensed Consolidated Statements of Net Earnings- Nine Months Ended September 30, 2001 and September 30, 2000 2 Condensed Consolidated Statements of Cash Flows- Nine Months Ended September 30, 2001 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 8-K 6 Signatures 7 </TABLE>
FARMERS & MERCHANTS BANCORP, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (in thousands of dollars) <TABLE> <CAPTION> Sept 30, 2001 December 31, 2000 Sept 30, 2000 <S> <C> <C> <C> ASSETS: Cash and due from banks $ 10,643 $ 17,951 $ 17,829 Interest bearing deposits with banks 12,557 100 100 Federal funds sold 12,335 370 - Investment Securities: U.S. Treasury 7,793 7,921 7,987 U.S. Government 92,214 61,057 56,431 State & political obligations 43,198 32,157 29,107 All others 10,064 15,097 12,077 Loans and leases 459,641 480,645 482,998 Bank premises and equipment-net 11,745 10,354 10,410 Accrued interest and other assets 14,422 9,508 10,479 TOTAL ASSETS $ 674,612 $ 635,160 $ 627,418 LIABILITIES AND SHAREHOLDERS' EQUITY LIABILITIES: Deposits: Demand $ 37,576 $ 40,729 $ 41,792 Time and savings 518,114 475,734 465,574 Federal funds purchased and securities sold under agreement to repurchase 24,669 18,903 21,687 Other borrowed money 17,711 30,786 31,004 Accrued interest and other liabilities 4,867 4,020 4,723 Total Liabilities 602,937 570,172 564,780 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 56,020 51,416 50,199 Accumulated other comprehensive income 2,978 895 (238) Total Shareholders' Equity 71,675 64,988 62,638 LIABILITIES AND SHAREHOLDERS' EQUITY $ 674,612 $ 635,160 $ 627,418 </TABLE> 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. 1
FARMERS & MERCHANTS BANCORP, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (in thousands of dollars) <TABLE> <CAPTION> Three Months Ended Nine Months Ended Sept 30, 2001 Sept 30, 2000 Sept 30, 2001 Sept 30, 2000 <S> <C> <C> <C> <C> INTEREST INCOME: Loans and leases $ 9,910 $ 10,872 $ 31,384 $ 31,417 Investment Securities: U.S. Treasury securities 123 125 368 356 Securities of U.S. Government agencies 1,163 832 3,176 2,433 Obligations of states and political subdivisions 477 357 1,287 1,116 Other 187 190 585 681 Federal funds 88 44 451 110 Deposits in banks 81 1 176 3 Total Interest Income 12,029 12,421 37,427 36,116 INTEREST EXPENSE: Deposits 5,685 5,763 17,681 16,308 Borrowed funds 493 892 1,923 2,308 Total Interest Expense 6,178 6,655 19,604 18,616 NET INTEREST INCOME BEFORE PROVISION FOR LOAN LOSSES 5,851 5,766 17,823 17,500 PROVISION FOR LOAN LOSSES 152 630 822 1,093 NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 5,699 5,136 17,001 16,407 OTHER INCOME: Service charges 500 472 1,409 1,278 Other 592 380 2,013 1,092 Net securities gains (losses) 23 - 227 - 1,115 852 3,649 2,370 OTHER EXPENSES: Salaries and wages 1,844 1,687 5,396 4,986 Pension and other employee benefits 476 415 1,347 1,153 Occupancy expense (net) 130 225 367 325 Other operating expenses 1,765 1,472 5,173 4,531 4,215 3,799 12,283 10,995 INCOME BEFORE FEDERAL INCOME TAX 2,599 2,189 8,367 7,782 FEDERAL INCOME TAXES 713 615 2,396 2,192 NET INCOME 1,886 1,574 5,971 5,590 OTHER COMPREHENSIVE INCOME (NET OF TAX): Unrealized gains (losses) on securities 1,150 620 2,083 523 COMPREHENSIVE INCOME $ 3,036 $ 2,194 $ 8,054 $ 6,113 NET INCOME PER SHARE (Based upon weighted average number of shares outstanding of 1,300,000 $ 1.49 $ 1.21 $ 4.59 $ 4.30 DIVIDENDS DECLARED $ 0.35 $ 0.35 $ 1.05 $ 1.05 </TABLE> See Notes to Condensed Consolidated Unaudited Financial Statements. 2
FARMERS & MERCHANTS BANCORP, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands of dollars) <TABLE> <CAPTION> Nine Months Ended Sept 30, 2001 Sept 30, 2000 <S> <C> <C> CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 5,971 $ 5,590 Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: Depreciation and amortization 916 825 Premium amortization 223 139 Discount amortization (68) (50) Provision for loan losses 822 1,093 Provision for deferred income taxes 14 (119) (Gain) loss on sale of fixed assets 6 17 (Gain) loss on sale of investment securities (227) - Changes in Operating Assets and Liabilities: Accrued interest receivable and other assets (4,928) (1,704) Accrued interest payable and other liabilities 847 (369) Net Cash Provided by Operating Activities 3,576 5,422 CASH FLOWS FROM INVESTING ACTIVITIES Capital expenditures (2,313) (1,076) Proceeds from sale of fixed assets - - Proceeds from maturities of investment securities: 28,759 11,073 Proceeds from sale of investment securities: 2,105 - Purchase of investment securities- (65,748) (17,835) Net increase in loans and leases 20,182 (20,144) Net Cash Used by Investing Activities (17,015) (27,982) CASH FLOWS FROM FINANCING ACTIVITIES Net increase in deposits 39,227 4,200 Net change in short-term borrowings 5,766 14,344 Increase in long-term borrowings - - Payments on long-term borrowings (13,075) 5,965 Payments of dividends (1,365) (1,365) Net Cash Provided by Financing Activities 30,553 23,144 Net change in cash and cash equivalents 17,114 584 Cash and cash equivalents - Beginning of year 18,421 17,345 CASH AND CASH EQUIVALENTS - END OF THE YEAR $ 35,535 $ 17,929 RECONCILIATION OF CASH AND CASH EQUIVALENTS: Cash and cash due from banks $ 10,643 $ 17,829 Interest bearing deposits 12,557 100 Federal funds sold 12,335 - $ 35,535 $ 17,929 </TABLE> See Notes to Condensed Consolidated Unaudited Financial Statements. 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 10-Q 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, 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. 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, 2001 comes primarily from net income from operations of $6 million. This compares with net income of $5.6 million for the same period in 2000. In addition, funds were purchased from correspondents, and the Federal Home Loan Bank when needed. During the year loan balances were reduced by 21 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: <TABLE> <S> <C> Primary Ratio 11.57% Total Capital Ratio 14.17% Risk Based Capital Tier 1 14.98% Risk Based Capital Tier 2 20.19% Stockholders' Equity/Total Assets 10.62% </TABLE> 5
PART II EXHIBIT AND REPORTS ON FORM 8-K ITEM 6 (A) The following documents are filed as part of this report: (B) Reports on Form 8-K No reports on Form 8-K were filed by the registrant during the quarter ended September 30, 2000 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: November 10, 2001 By: /s/ Joe E. Crossgrove -------------------------------- Joe E. Crossgrove President and Cashier Date: November 10, 2001 By: /s/ Randal H. Schroeder -------------------------------- Randal H. Schroeder Asst. Vice-President and Chief Operating Officer