Delaware
|
94-3327828
|
(State
or other jurisdiction
|
(I.R.S. Employer
|
of
incorporation or organization)
|
Identification
No.)
|
111
W. Pine Street, Lodi, California
|
95240
|
(Address
of principal Executive offices)
|
(Zip
Code)
|
Large accelerated filer o | Accelerated filer x | Non-accelerated filer o | Smaller Reporting Company o |
PART
I. - FINANCIAL
INFORMATION
|
Page
|
|
Item
1 -
|
||
3
|
||
4
|
||
5
|
||
6
|
||
7
|
||
8
|
||
Item
2 -
|
11
|
|
Item
3 -
|
25
|
|
Item
4 -
|
28
|
|
PART
II. - OTHER INFORMATION
|
||
Item
1 -
|
28
|
|
Item
1A
|
28
|
|
Item
2 -
|
29
|
|
Item
3 -
|
29
|
|
Item
4 -
|
29
|
|
Item
5 -
|
30
|
|
Item
6 -
|
30
|
|
31
|
||
31
|
Consolidated
Balance Sheets (Unaudited)
|
||||||||||||
(in
thousands)
|
June 30,
|
December 31,
|
June 30,
|
|||||||||
Assets
|
2008
|
2007
|
2007
|
|||||||||
Cash
and Cash Equivalents:
|
||||||||||||
Cash
and Due From Banks
|
$ | 53,733 | $ | 50,240 | $ | 45,318 | ||||||
Federal
Funds Sold
|
27,700 | 1,150 | 24,000 | |||||||||
Total
Cash and Cash Equivalents
|
81,433 | 51,390 | 69,318 | |||||||||
Investment
Securities:
|
||||||||||||
Available-for-Sale
|
204,135 | 142,043 | 139,137 | |||||||||
Held-to-Maturity
|
106,418 | 105,594 | 109,689 | |||||||||
Total
Investment Securities
|
310,553 | 247,637 | 248,826 | |||||||||
Loans
|
1,121,865 | 1,140,969 | 1,085,439 | |||||||||
Less:
Allowance for Loan Losses
|
18,682 | 18,483 | 17,930 | |||||||||
Loans,
Net
|
1,103,183 | 1,122,486 | 1,067,509 | |||||||||
Premises
and Equipment, Net
|
22,101 | 20,188 | 19,790 | |||||||||
Bank
Owned Life Insurance
|
41,072 | 40,180 | 39,295 | |||||||||
Interest
Receivable and Other Assets
|
50,454 | 37,291 | 37,384 | |||||||||
Total
Assets
|
$ | 1,608,796 | $ | 1,519,172 | $ | 1,482,122 | ||||||
Liabilities
|
||||||||||||
Deposits:
|
||||||||||||
Demand
|
$ | 274,306 | $ | 307,299 | $ | 279,611 | ||||||
Interest
Bearing Transaction
|
127,295 | 138,665 | 126,902 | |||||||||
Savings
|
334,649 | 301,678 | 281,358 | |||||||||
Time
|
626,492 | 563,148 | 558,325 | |||||||||
Total
Deposits
|
1,362,742 | 1,310,790 | 1,246,196 | |||||||||
Securities
Sold Under Agreement to Repurchase
|
60,000 | - | - | |||||||||
Federal
Home Loan Bank Advances
|
729 | 28,954 | 63,878 | |||||||||
Subordinated
Debentures
|
10,310 | 10,310 | 10,310 | |||||||||
Interest
Payable and Other Liabilities
|
28,050 | 25,700 | 23,608 | |||||||||
Total
Liabilities
|
1,461,831 | 1,375,754 | 1,343,992 | |||||||||
Shareholders'
Equity
|
||||||||||||
Common
Stock
|
8 | 8 | 8 | |||||||||
Additional
Paid-In Capital
|
81,642 | 84,437 | 89,317 | |||||||||
Retained
Earnings
|
65,864 | 57,990 | 50,730 | |||||||||
Accumulated
Other Comprehensive (Loss) Income
|
(549 | ) | 983 | (1,925 | ) | |||||||
Total
Shareholders' Equity
|
146,965 | 143,418 | 138,130 | |||||||||
Total
Liabilities & Shareholders' Equity
|
$ | 1,608,796 | $ | 1,519,172 | $ | 1,482,122 | ||||||
The
accompanying notes are an integral part of these unaudited consolidated
financial statements
|
Consolidated
Statements of Income (Unaudited)
|
||||||||||||||||
(in
thousands except per share data)
|
Three
Months
|
Six
Months
|
||||||||||||||
Ended
June 30,
|
Ended
June 30,
|
|||||||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||||||
Interest
Income
|
||||||||||||||||
Interest
and Fees on Loans
|
$ | 18,986 | $ | 21,178 | $ | 39,543 | $ | 41,321 | ||||||||
Interest
on Federal Funds Sold and Securities Purchased
|
||||||||||||||||
Under
Agreements to Resell
|
38 | 113 | 44 | 388 | ||||||||||||
Interest
on Investment Securities:
|
||||||||||||||||
Taxable
|
2,892 | 1,861 | 5,312 | 3,769 | ||||||||||||
Tax-Exempt
|
762 | 818 | 1,536 | 1,631 | ||||||||||||
Total
Interest Income
|
22,678 | 23,970 | 46,435 | 47,109 | ||||||||||||
Interest
Expense
|
||||||||||||||||
Deposits
|
5,450 | 7,551 | 12,192 | 14,532 | ||||||||||||
Borrowed
Funds
|
436 | 339 | 667 | 738 | ||||||||||||
Subordinated
Debentures
|
147 | 214 | 342 | 428 | ||||||||||||
Total
Interest Expense
|
6,033 | 8,104 | 13,201 | 15,698 | ||||||||||||
Net
Interest Income
|
16,645 | 15,866 | 33,234 | 31,411 | ||||||||||||
Provision
for Loan Losses
|
4,035 | 250 | 4,605 | 250 | ||||||||||||
Net
Interest Income After Provision for Loan Losses
|
12,610 | 15,616 | 28,629 | 31,161 | ||||||||||||
Non-Interest
Income
|
||||||||||||||||
Service
Charges on Deposit Accounts
|
1,797 | 1,893 | 3,515 | 3,534 | ||||||||||||
Net
Gain (Loss) on Investment Securities
|
674 | (315 | ) | 535 | (1,083 | ) | ||||||||||
Credit
Card Merchant Fees
|
555 | 557 | 1,089 | 1,067 | ||||||||||||
Increase
in Cash Surrender Value of Life Insurance
|
453 | 438 | 892 | 851 | ||||||||||||
ATM
Fees
|
390 | 349 | 751 | 664 | ||||||||||||
Other
|
3,981 | 1,209 | 4,045 | 2,850 | ||||||||||||
Total
Non-Interest Income
|
7,850 | 4,131 | 10,827 | 7,883 | ||||||||||||
Non-Interest
Expense
|
||||||||||||||||
Salaries
& Employee Benefits
|
7,117 | 7,257 | 13,603 | 14,647 | ||||||||||||
Occupancy
|
686 | 651 | 1,344 | 1,301 | ||||||||||||
Equipment
|
627 | 642 | 1,123 | 1,305 | ||||||||||||
Credit
Card Merchant Expense
|
421 | 418 | 828 | 797 | ||||||||||||
Marketing
|
167 | 115 | 257 | 224 | ||||||||||||
Other
|
1,856 | 1,856 | 3,485 | 3,686 | ||||||||||||
Total
Non-Interest Expense
|
10,874 | 10,939 | 20,640 | 21,960 | ||||||||||||
Income
Before Income Taxes
|
9,586 | 8,808 | 18,816 | 17,084 | ||||||||||||
Provision
for Income Taxes
|
3,624 | 3,142 | 7,090 | 5,949 | ||||||||||||
Net
Income
|
$ | 5,962 | $ | 5,666 | $ | 11,726 | $ | 11,135 | ||||||||
Earnings
Per Share
|
$ | 7.50 | $ | 6.98 | $ | 14.71 | $ | 13.72 | ||||||||
The
accompanying notes are an integral part of these unaudited consolidated
financial statements
|
Consolidated
Statements of Comprehensive Income (Unaudited
|
||||||||||||||||
(in
thousands)
|
Three
Months
|
Six
Months
|
||||||||||||||
Ended
June 30,
|
Ended
June 30,
|
|||||||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||||||
Net
Income
|
$ | 5,962 | $ | 5,666 | $ | 11,726 | $ | 11,135 | ||||||||
Other
Comprehensive Loss -
|
||||||||||||||||
Reclassification
adjustment for realized gains included in net income, net of related
income tax effects of $0 and $0 for the quarters ended June 30, 2008 and
2007, respectively, and $0 and $1 for the six months ended June 30, 2008
and 2007, respectively.
|
- | - | - | 1 | ||||||||||||
Unrealized
Losses on Securities:
|
||||||||||||||||
Unrealized
holding losses arising during the period, net of income tax benefit of
$(2,017) and $(1,340) for the quarters ended June 30, 2008 and 2007,
respectively, and of $(887) and $(1,330) for the six months ended June 30,
2008 and 2007, respectively.
|
(2,778 | ) | (1,847 | ) | (1,222 | ) | (1,834 | ) | ||||||||
Less:
Reclassification adjustment for realized (gains) losses included in net
income, net of related income tax effects of $(283) and $132 for the
quarters ended June 30, 2008 and 2007, respectively, and of $(225) and
$455 for the six months ended June 30, 2008 and 2007,
respectively.
|
(391 | ) | 183 | (310 | ) | 628 | ||||||||||
Total
Other Comprehensive Loss
|
(3,169 | ) | (1,664 | ) | (1,532 | ) | (1,205 | ) | ||||||||
Comprehensive
Income
|
$ | 2,793 | $ | 4,002 | $ | 10,194 | $ | 9,930 | ||||||||
The
accompanying notes are an integral part of these unaudited consolidated
financial statements
|
Consolidated
Statements of Changes in Shareholders'
Equity (Unaudited)
|
||||||||||||||||||||||||
(in
thousands except share data)
|
Common
Shares
Outstanding
|
Common
Stock
|
Additional
Paid-In
Capital
|
Retained
Earnings
|
Accumulated
Other
Comprehensive
Income
(Loss)
|
Total
Shareholders'
Equity
|
||||||||||||||||||
Balance,
December 31, 2006
|
811,933 | $ | 8 | $ | 89,926 | $ | 43,126 | $ | (720 | ) | $ | 132,340 | ||||||||||||
Net
Income
|
- | - | 11,135 | - | 11,135 | |||||||||||||||||||
Cash
Dividends Declared on
|
- | |||||||||||||||||||||||
Common
Stock
|
- | - | (3,531 | ) | - | (3,531 | ) | |||||||||||||||||
Repurchase
of Stock
|
(1,194 | ) | - | (609 | ) | - | - | (609 | ) | |||||||||||||||
Change
in Unrealized Gain on Derivative Instruments
|
1 | 1 | ||||||||||||||||||||||
Change
in Net Unrealized Loss on Securities Available for Sale
|
- | - | - | (1,206 | ) | (1,206 | ) | |||||||||||||||||
Balance,
June 30, 2007
|
810,739 | $ | 8 | $ | 89,317 | $ | 50,730 | $ | (1,925 | ) | $ | 138,130 | ||||||||||||
Balance,
December 31, 2007
|
800,112 | $ | 8 | $ | 84,437 | $ | 57,990 | $ | 983 | $ | 143,418 | |||||||||||||
Net
Income
|
- | - | 11,726 | - | 11,726 | |||||||||||||||||||
Cash
Dividends Declared on
|
- | |||||||||||||||||||||||
Common
Stock
|
- | - | (3,852 | ) | - | (3,852 | ) | |||||||||||||||||
Repurchase
of Stock
|
(6,076 | ) | - | (2,795 | ) | - | - | (2,795 | ) | |||||||||||||||
Change
in Net Unrealized Loss on Securities Available for Sale
|
- | - | - | (1,532 | ) | (1,532 | ) | |||||||||||||||||
Balance,
June 30, 2008
|
794,036 | $ | 8 | $ | 81,642 | $ | 65,864 | $ | (549 | ) | $ | 146,965 | ||||||||||||
The
accompanying notes are an integral part of these unaudited consolidated
financial statements
|
Consolidated Statements of Cash Flows (Unaudited)
|
Six
Months Ended
|
|||||||
(in
thousands)
|
June 30,
|
June 30,
|
||||||
2008
|
2007
|
|||||||
Operating
Activities:
|
||||||||
Net
Income
|
$ | 11,726 | $ | 11,135 | ||||
Adjustments
to Reconcile Net Income to Net Cash
Provided by Operating Activities:
|
||||||||
Provision
for Loan Losses
|
4,605 | 250 | ||||||
Depreciation
and Amortization
|
886 | 1,024 | ||||||
Net
Amortization (Accretion) of Investment Security Discounts &
Premium
|
64 | (189 | ) | |||||
Net
(Gain) Loss on Investment Securities
|
(535 | ) | 1,083 | |||||
Net
Gain on Sale of Property & Equipment
|
(8 | ) | - | |||||
Net
Change in Operating Assets & Liabilities:
|
||||||||
Net
Increase in Interest Receivable and Other Assets
|
(12,943 | ) | (4,753 | ) | ||||
Net
Increase in Interest Payable and Other Liabilities
|
2,350 | 1,085 | ||||||
Net
Cash Provided by Operating Activities
|
6,145 | 9,635 | ||||||
Investing
Activities:
|
||||||||
Securities
Available-for-Sale:
|
||||||||
Purchased
|
(119,742 | ) | (33,014 | ) | ||||
Sold,
Matured or Called
|
55,532 | 23,570 | ||||||
Securities
Held-to-Maturity:
|
||||||||
Purchased
|
(2,500 | ) | (2,165 | ) | ||||
Matured
or Called
|
1,621 | 3,676 | ||||||
Net
Loans Originated or Acquired
|
14,464 | (39,093 | ) | |||||
Principal
Collected on Loans Previously Charged Off
|
234 | 147 | ||||||
Net
Additions to Premises and Equipment
|
(2,799 | ) | (318 | ) | ||||
Proceeds
from Disposition of Property & Equipment
|
8 | - | ||||||
Net
Cash Used by Investing Activities
|
(53,182 | ) | (47,197 | ) | ||||
Financing
Activities:
|
||||||||
Net
Decrease in Demand, Interest-Bearing Transaction, and Savings
Accounts
|
(11,392 | ) | (11,165 | ) | ||||
Increase
in Time Deposits
|
63,344 | 58,833 | ||||||
Net
Increase in Securities Sold Under Agreement to Repurchase
|
60,000 | - | ||||||
Net
(Decrease) Increase in Federal Home Loan Bank Advances
|
(28,225 | ) | 16,346 | |||||
Cash
Dividends
|
(3,852 | ) | (3,531 | ) | ||||
Stock
Repurchases
|
(2,795 | ) | (609 | ) | ||||
Net
Cash Provided by Financing Activities
|
77,080 | 59,874 | ||||||
Increase
in Cash and Cash Equivalents
|
30,043 | 22,312 | ||||||
Cash
and Cash Equivalents at Beginning of Year
|
51,390 | 47,006 | ||||||
Cash
and Cash Equivalents as of June 30, 2008 and June 30, 2007
|
$ | 81,433 | $ | 69,318 | ||||
The
accompanying notes are an integral part of these unaudited consolidated
financial statements
|
Fair
Value Measurements
At
June 30, 2008, Using
|
||||||||||||||||
(in
thousands)
|
Fair
Value
|
Quoted
Prices in
Active
Markets for
Identical
Assets
|
Other
Observable
Inputs
|
Significant
Unobservable
Inputs
|
||||||||||||
June
30, 2008
|
(Level
1)
|
(Level
2)
|
(Level
3)
|
|||||||||||||
Available-for-Sale
Securities
|
$ | 204,135 | $ | - | $ | 204,135 | $ | - | ||||||||
Total
Assets Measured at Fair Value On a Recurring Basis
|
$ | 204,135 | $ | - | $ | 204,135 | $ | - |
Fair
Value Measurements
At
June 30, 2008, Using
|
||||||||||||||||
(in
thousands)
|
Fair
Value
|
Quoted
Prices in
Active
Markets for
Identical
Assets
|
Other
Observable
Inputs
|
Significant
Unobservable
Inputs
|
||||||||||||
June 30,
2008
|
(Level
1)
|
(Level
2)
|
(Level
3)
|
|||||||||||||
Impaired
Loans
|
$ | 2,729 | $ | - | $ | 2,729 | $ | - | ||||||||
Other
Real Estate Owned
|
$ | 6,893 | $ | - | $ | 6,893 | $ | - | ||||||||
Total
Assets Measured at Fair Value On a Non-Recurring Basis
|
$ | 9,622 | $ | - | $ | 9,622 | $ | - |
Three
Months
Ended
June 30,
|
Six
Months
Ended
June 30,
|
|||||||||||||||
(net
income in thousands)
|
2008
|
2007
|
2008
|
2007
|
||||||||||||
Net
Income
|
$ | 5,962 | $ | 5,666 | $ | 11,726 | $ | 11,135 | ||||||||
Average
Number of Common Shares Outstanding
|
795,204 | 811,552 | 797,093 | 811,708 | ||||||||||||
Per
Share Amount
|
$ | 7.50 | $ | 6.98 | $ | 14.71 | $ | 13.72 |
·
|
Net
income increased 5.3% to $11.7 million from $11.1
million.
|
·
|
Earnings
per share increased 7.2% to $14.71 from
$13.72.
|
·
|
Total
assets increased 8.5% to $1.6
billion.
|
·
|
Total
loans increased 3.3% to $1.1
billion.
|
·
|
Total
deposits increased 9.4% to $1.4
billion.
|
·
|
Net
interest income increased 5.8% to $33.2 million from $31.4
million.
|
Farmers
& Merchants Bancorp
|
||||||||||||||||||||||||
Quarterly
Average Balances and Interest Rates
|
||||||||||||||||||||||||
(Interest
and Rates on a Taxable Equivalent Basis)
|
||||||||||||||||||||||||
(in
thousands)
|
||||||||||||||||||||||||
Three
Months Ended June 30,
|
Three
Months Ended June 30,
|
|||||||||||||||||||||||
2008
|
2007
|
|||||||||||||||||||||||
Assets
|
Balance
|
Interest
|
Rate
|
Balance
|
Interest
|
Rate
|
||||||||||||||||||
Federal
Funds Sold and Securities Purchased Under Agreements to
Resell
|
$ | 7,360 | $ | 38 | 2.07 | % | $ | 8,574 | $ | 113 | 5.29 | % | ||||||||||||
Investment
Securities Available-for-Sale
|
||||||||||||||||||||||||
Municipals
- Non-Taxable
|
8,451 | 160 | 7.57 | % | 11,726 | 204 | 6.97 | % | ||||||||||||||||
Mortgage
Backed Securities
|
180,190 | 2,425 | 5.38 | % | 107,773 | 1,397 | 5.18 | % | ||||||||||||||||
Other
|
3,335 | 79 | 9.48 | % | 6,562 | 55 | 3.35 | % | ||||||||||||||||
Total
Investment Securities Available-for-Sale
|
191,976 | 2,664 | 5.55 | % | 126,061 | 1,656 | 5.26 | % | ||||||||||||||||
Investment
Securities Held-to-Maturity
|
||||||||||||||||||||||||
U.S.
Agencies
|
30,399 | 317 | 4.17 | % | 30,502 | 319 | 4.18 | % | ||||||||||||||||
Municipals
- Non-Taxable
|
66,096 | 967 | 5.85 | % | 69,458 | 1,015 | 5.84 | % | ||||||||||||||||
Mortgage
Backed Securities
|
6,123 | 59 | 3.85 | % | 7,961 | 75 | 3.77 | % | ||||||||||||||||
Other
|
1,992 | 13 | 2.61 | % | 2,110 | 15 | 2.84 | % | ||||||||||||||||
Total
Investment Securities Held-to-Maturity
|
104,610 | 1,356 | 5.18 | % | 110,031 | 1,424 | 5.17 | % | ||||||||||||||||
Loans
|
||||||||||||||||||||||||
Real
Estate
|
664,933 | 11,004 | 6.64 | % | 626,265 | 11,499 | 7.36 | % | ||||||||||||||||
Home
Equity
|
66,719 | 1,070 | 6.43 | % | 65,990 | 1,304 | 7.93 | % | ||||||||||||||||
Agricultural
|
177,357 | 3,178 | 7.19 | % | 199,861 | 4,219 | 8.47 | % | ||||||||||||||||
Commercial
|
198,748 | 3,332 | 6.72 | % | 175,944 | 3,708 | 8.45 | % | ||||||||||||||||
Consumer
|
12,669 | 272 | 8.61 | % | 13,755 | 313 | 9.13 | % | ||||||||||||||||
Credit
Card
|
5,192 | 127 | 9.81 | % | 5,348 | 131 | 9.82 | % | ||||||||||||||||
Municipal
|
1,168 | 3 | 1.03 | % | 1,168 | 4 | 1.37 | % | ||||||||||||||||
Total
Loans
|
1,126,786 | 18,986 | 6.76 | % | 1,088,331 | 21,178 | 7.81 | % | ||||||||||||||||
Total
Earning Assets
|
1,430,732 | $ | 23,044 | 6.46 | % | 1,332,997 | $ | 24,371 | 7.33 | % | ||||||||||||||
Unrealized
Gain/(Loss) on Securities Available-for-Sale
|
3,018 | (1,038 | ) | |||||||||||||||||||||
Allowance
for Loan Losses
|
(19,217 | ) | (18,064 | ) | ||||||||||||||||||||
Cash
and Due From Banks
|
36,703 | 37,308 | ||||||||||||||||||||||
All
Other Assets
|
101,527 | 91,230 | ||||||||||||||||||||||
Total
Assets
|
$ | 1,552,763 | $ | 1,442,433 | ||||||||||||||||||||
Liabilities
& Shareholders' Equity
|
||||||||||||||||||||||||
Interest
Bearing Deposits
|
||||||||||||||||||||||||
Interest
Bearing DDA
|
$ | 129,699 | $ | 31 | 0.10 | % | $ | 129,851 | $ | 24 | 0.07 | % | ||||||||||||
Savings
|
318,553 | 761 | 0.96 | % | 290,779 | 1,108 | 1.53 | % | ||||||||||||||||
Time
Deposits
|
598,741 | 4,658 | 3.12 | % | 551,841 | 6,419 | 4.67 | % | ||||||||||||||||
Total
Interest Bearing Deposits
|
1,046,993 | 5,450 | 2.09 | % | 972,471 | 7,551 | 3.11 | % | ||||||||||||||||
Securities
Sold Under Agreement to Repurchase
|
45,778 | 378 | 3.31 | % | - | - | 0.00 | % | ||||||||||||||||
Other
Borrowed Funds
|
9,158 | 58 | 2.54 | % | 25,715 | 339 | 5.29 | % | ||||||||||||||||
Subordinated
Debentures
|
10,310 | 147 | 5.72 | % | 10,310 | 214 | 8.33 | % | ||||||||||||||||
Total
Interest Bearing Liabilities
|
1,112,239 | $ | 6,033 | 2.18 | % | 1,008,496 | $ | 8,104 | 3.22 | % | ||||||||||||||
Interest
Rate Spread
|
4.28 | % | 4.11 | % | ||||||||||||||||||||
Demand
Deposits (Non-Interest Bearing)
|
263,102 | 272,504 | ||||||||||||||||||||||
All
Other Liabilities
|
27,696 | 21,862 | ||||||||||||||||||||||
Total
Liabilities
|
1,403,037 | 1,302,862 | ||||||||||||||||||||||
Shareholders'
Equity
|
149,726 | 139,571 | ||||||||||||||||||||||
Total
Liabilities & Shareholders' Equity
|
$ | 1,552,763 | $ | 1,442,433 | ||||||||||||||||||||
Impact
of Non-Interest Bearing Deposits and Other Liabilities
|
0.48 | % | 0.78 | % | ||||||||||||||||||||
Net
Interest Income and Margin on Total Earning Assets
|
17,011 | 4.77 | % | 16,267 | 4.89 | % | ||||||||||||||||||
Tax
Equivalent Adjustment
|
(366 | ) | (401 | ) | ||||||||||||||||||||
Net
Interest Income
|
$ | 16,645 | 4.67 | % | $ | 15,866 | 4.77 | % | ||||||||||||||||
Notes: Yields
on municipal securities have been calculated on a fully taxable equivalent
basis. Loan interest income includes fee income and unearned discount
in the amount of $490,000 and $625,000 for the quarters ended June 30,
2008 and 2007, respectively. Yields on securities available-for-sale are
based on historical cost.
|
Farmers
& Merchants Bancorp
|
||||||||||||||||||||||||
Year-to-Date
Average Balances and Interest Rates
|
||||||||||||||||||||||||
(Interest
and Rates on a Taxable Equivalent Basis)
|
||||||||||||||||||||||||
(in
thousands)
|
||||||||||||||||||||||||
Six
Months Ended June 30,
|
Six
Months Ended June 30,
|
|||||||||||||||||||||||
2008
|
2007
|
|||||||||||||||||||||||
Assets
|
Balance
|
Interest
|
Rate
|
Balance
|
Interest
|
Rate
|
||||||||||||||||||
Federal
Funds Sold and Securities Purchased Under Agreements to
Resell
|
$ | 4,060 | $ | 44 | 2.17 | % | $ | 14,695 | $ | 388 | 5.32 | % | ||||||||||||
Investment
Securities Available-for-Sale
|
||||||||||||||||||||||||
Municipals
- Non-Taxable
|
8,956 | 336 | 7.50 | % | 11,462 | 402 | 7.02 | % | ||||||||||||||||
Mortgage
Backed Securities
|
163,405 | 4,377 | 5.36 | % | 108,347 | 2,790 | 5.15 | % | ||||||||||||||||
Other
|
3,546 | 152 | 8.57 | % | 7,522 | 156 | 4.15 | % | ||||||||||||||||
Total
Investment Securities Available-for-Sale
|
175,907 | 4,865 | 5.53 | % | 127,331 | 3,348 | 5.26 | % | ||||||||||||||||
Investment
Securities Held-to-Maturity
|
||||||||||||||||||||||||
U.S.
Agencies
|
30,412 | 635 | 4.18 | % | 30,516 | 636 | 4.17 | % | ||||||||||||||||
Municipals
- Non-Taxable
|
66,096 | 1,937 | 5.86 | % | 69,696 | 2,029 | 5.82 | % | ||||||||||||||||
Mortgage
Backed Securities
|
6,334 | 122 | 3.85 | % | 8,211 | 156 | 3.80 | % | ||||||||||||||||
Other
|
2,002 | 26 | 2.60 | % | 2,111 | 31 | 2.94 | % | ||||||||||||||||
Total
Investment Securities Held-to-Maturity
|
104,844 | 2,720 | 5.19 | % | 110,534 | 2,852 | 5.16 | % | ||||||||||||||||
Loans
|
||||||||||||||||||||||||
Real
Estate
|
658,119 | 22,859 | 6.97 | % | 621,418 | 22,671 | 7.36 | % | ||||||||||||||||
Home
Equity
|
64,929 | 2,223 | 6.87 | % | 66,068 | 2,609 | 7.96 | % | ||||||||||||||||
Agricultural
|
180,728 | 6,756 | 7.50 | % | 190,852 | 8,036 | 8.49 | % | ||||||||||||||||
Commercial
|
196,851 | 6,901 | 7.03 | % | 168,822 | 7,120 | 8.50 | % | ||||||||||||||||
Consumer
|
12,657 | 533 | 8.45 | % | 13,780 | 607 | 8.88 | % | ||||||||||||||||
Credit
Card
|
5,273 | 264 | 10.04 | % | 5,416 | 270 | 10.05 | % | ||||||||||||||||
Municipal
|
1,102 | 7 | 1.27 | % | 1,042 | 8 | 1.55 | % | ||||||||||||||||
Total
Loans
|
1,119,659 | 39,543 | 7.08 | % | 1,067,398 | 41,321 | 7.81 | % | ||||||||||||||||
Total
Earning Assets
|
1,404,470 | $ | 47,172 | 6.74 | % | 1,319,958 | $ | 47,909 | 7.32 | % | ||||||||||||||
Unrealized
Gain/(Loss) on Securities Available-for-Sale
|
2,646 | (1,131 | ) | |||||||||||||||||||||
Allowance
for Loan Losses
|
(18,931 | ) | (18,069 | ) | ||||||||||||||||||||
Cash
and Due From Banks
|
37,122 | 38,464 | ||||||||||||||||||||||
All
Other Assets
|
98,186 | 90,199 | ||||||||||||||||||||||
Total
Assets
|
$ | 1,523,493 | $ | 1,429,421 | ||||||||||||||||||||
Liabilities
& Shareholders' Equity
|
||||||||||||||||||||||||
Interest
Bearing Deposits
|
||||||||||||||||||||||||
Interest
Bearing DDA
|
$ | 129,962 | $ | 57 | 0.09 | % | $ | 130,262 | $ | 46 | 0.07 | % | ||||||||||||
Savings
|
316,052 | 1,837 | 1.17 | % | 289,654 | 2,043 | 1.42 | % | ||||||||||||||||
Time
Deposits
|
584,226 | 10,298 | 3.54 | % | 541,526 | 12,443 | 4.63 | % | ||||||||||||||||
Total
Interest Bearing Deposits
|
1,030,240 | 12,192 | 2.37 | % | 961,442 | 14,532 | 3.05 | % | ||||||||||||||||
Securities
Sold Under Agreement to Repurchase
|
27,033 | 446 | 3.31 | % | - | - | 0.00 | % | ||||||||||||||||
Other
Borrowed Funds
|
15,328 | 221 | 2.89 | % | 28,342 | 738 | 5.25 | % | ||||||||||||||||
Subordinated
Debentures
|
10,310 | 342 | 6.65 | % | 10,310 | 428 | 8.37 | % | ||||||||||||||||
Total
Interest Bearing Liabilities
|
1,082,911 | $ | 13,201 | 2.44 | % | 1,000,094 | $ | 15,698 | 3.17 | % | ||||||||||||||
Interest
Rate Spread
|
4.29 | % | 4.15 | % | ||||||||||||||||||||
Demand
Deposits (Non-Interest Bearing)
|
268,082 | 271,362 | ||||||||||||||||||||||
All
Other Liabilities
|
25,047 | 21,061 | ||||||||||||||||||||||
Total
Liabilities
|
1,376,040 | 1,292,517 | ||||||||||||||||||||||
Shareholders'
Equity
|
147,453 | 136,904 | ||||||||||||||||||||||
Total
Liabilities & Shareholders' Equity
|
$ | 1,523,493 | $ | 1,429,421 | ||||||||||||||||||||
Impact
of Non-Interest Bearing Deposits and Other Liabilities
|
0.56 | % | 0.77 | % | ||||||||||||||||||||
Net
Interest Income and Margin on Total Earning Assets
|
33,971 | 4.85 | % | 32,211 | 4.92 | % | ||||||||||||||||||
Tax
Equivalent Adjustment
|
(737 | ) | (800 | ) | ||||||||||||||||||||
Net
Interest Income
|
$ | 33,234 | 4.75 | % | $ | 31,411 | 4.80 | % | ||||||||||||||||
Notes: Yields
on municipal securities have been calculated on a fully taxable equivalent
basis. Loan interest income includes fee income and unearned discount
in the amount of $1.3 million and $1.1 million for the six months ended
June 30, 2008 and 2007, respectively. Yields on securities
available-for-sale are based on historical cost.
|
||||||||||||||||||||||||
Farmers
& Merchants Bancorp
|
||||||||||||||||||||||||
Volume
and Rate Analysis of Net Interest Revenue
|
||||||||||||||||||||||||
(Rates
on a Taxable Equivalent Basis)
|
||||||||||||||||||||||||
(in
thousands)
|
Three
Months Ended
|
Six
Months Ended
|
||||||||||||||||||||||
June 30, 2008 compared to June 30, 2007
|
June 30,
2008 compared to June 30, 2007
|
|||||||||||||||||||||||
Interest
Earning Assets
|
Volume
|
Rate
|
Net
Chg.
|
Volume
|
Rate
|
Net
Chg.
|
||||||||||||||||||
Federal
Funds Sold
|
$ | (5 | ) | $ | (70 | ) | $ | (75 | ) | $ | (189 | ) | $ | (155 | ) | $ | (344 | ) | ||||||
Investment
Securities Available for Sale
|
||||||||||||||||||||||||
Municipals
- Non-Taxable
|
(60 | ) | 16 | (44 | ) | (93 | ) | 27 | (66 | ) | ||||||||||||||
Mortgage
Backed Securities
|
974 | 54 | 1,028 | 1,471 | 116 | 1,587 | ||||||||||||||||||
Other
|
(37 | ) | 61 | 24 | (111 | ) | 107 | (4 | ) | |||||||||||||||
Total
Investment Securities Available for Sale
|
877 | 131 | 1,008 | 1,267 | 250 | 1,517 | ||||||||||||||||||
Investment
Securities Held to Maturity
|
||||||||||||||||||||||||
U.S.
Agencies
|
(1 | ) | (1 | ) | (2 | ) | (2 | ) | 1 | (1 | ) | |||||||||||||
Municipals
- Non-Taxable
|
(49 | ) | 1 | (48 | ) | (106 | ) | 14 | (92 | ) | ||||||||||||||
Mortgage
Backed Securities
|
(17 | ) | 1 | (16 | ) | (36 | ) | 2 | (34 | ) | ||||||||||||||
Other
|
(1 | ) | (1 | ) | (2 | ) | (2 | ) | (3 | ) | (5 | ) | ||||||||||||
Total
Investment Securities Held to Maturity
|
(68 | ) | 0 | (68 | ) | (146 | ) | 14 | (132 | ) | ||||||||||||||
Loans:
|
||||||||||||||||||||||||
Real
Estate
|
686 | (1,181 | ) | (495 | ) | 1,378 | (1,190 | ) | 188 | |||||||||||||||
Home
Equity
|
15 | (249 | ) | (234 | ) | (43 | ) | (343 | ) | (386 | ) | |||||||||||||
Agricultural
|
(444 | ) | (597 | ) | (1,041 | ) | (399 | ) | (881 | ) | (1,280 | ) | ||||||||||||
Commercial
|
447 | (823 | ) | (376 | ) | 1,111 | (1,330 | ) | (219 | ) | ||||||||||||||
Consumer
|
(24 | ) | (17 | ) | (41 | ) | (46 | ) | (28 | ) | (74 | ) | ||||||||||||
Credit
Card
|
(4 | ) | - | (4 | ) | (7 | ) | 1 | (6 | ) | ||||||||||||||
Other
|
- | (1 | ) | (1 | ) | - | (1 | ) | (1 | ) | ||||||||||||||
Total
Loans
|
676 | (2,868 | ) | (2,192 | ) | 1,994 | (3,772 | ) | (1,778 | ) | ||||||||||||||
Total
Earning Assets
|
1,480 | (2,807 | ) | (1,327 | ) | 2,926 | (3,663 | ) | (737 | ) | ||||||||||||||
Interest
Bearing Liabilities
|
||||||||||||||||||||||||
Interest
Bearing Deposits:
|
||||||||||||||||||||||||
Transaction
|
- | 7 | 7 | - | 11 | 11 | ||||||||||||||||||
Savings
|
97 | (444 | ) | (347 | ) | 181 | (387 | ) | (206 | ) | ||||||||||||||
Time
Deposits
|
517 | (2,278 | ) | (1,761 | ) | 949 | (3,094 | ) | (2,145 | ) | ||||||||||||||
Total
Interest Bearing Deposits
|
614 | (2,715 | ) | (2,101 | ) | 1,130 | (3,470 | ) | (2,340 | ) | ||||||||||||||
Securities
Sold Under Agreement to Repurchase
|
378 | - | 378 | 446 | - | 446 | ||||||||||||||||||
Other
Borrowed Funds
|
(171 | ) | (110 | ) | (281 | ) | (262 | ) | (255 | ) | (517 | ) | ||||||||||||
Subordinated
Debentures
|
- | (67 | ) | (67 | ) | - | (86 | ) | (86 | ) | ||||||||||||||
Total
Interest Bearing Liabilities
|
821 | (2,892 | ) | (2,071 | ) | 1,314 | (3,811 | ) | (2,497 | ) | ||||||||||||||
Total
Change
|
$ | 659 | $ | 85 | $ | 744 | $ | 1,612 | $ | 148 | $ | 1,760 | ||||||||||||
Notes: Rate/volume
variance is allocated based on the percentage relationship of changes in
volume and changes in rate to the total "net change". The above
figures have been rounded to the nearest whole number.
|
Three
Months Ended
June 30,
|
Six
Months Ended
June 30,
|
|||||||||||||||
(in
thousands)
|
2008
|
2007
|
2008
|
2007
|
||||||||||||
Balance
at Beginning of Period
|
$ | 19,032 | $ | 18,060 | $ | 18,483 | $ | 18,099 | ||||||||
Provision
Charged to Expense
|
4,035 | 250 | 4,605 | 250 | ||||||||||||
Recoveries
of Loans Previously Charged Off
|
142 | 53 | 234 | 147 | ||||||||||||
Loans
Charged Off
|
(4,527 | ) | (433 | ) | (4,640 | ) | (566 | ) | ||||||||
Balance
at End of Period
|
$ | 18,682 | $ | 17,930 | $ | 18,682 | $ | 17,930 |
(in
thousands)
|
June 30,
2008
|
Dec. 31,
2007
|
June 30,
2007
|
|||||||||
Commercial
Real Estate
|
$ | 255,457 | $ | 245,925 | $ | 246,921 | ||||||
Real
Estate Secured by Farmland
|
219,614 | 207,890 | 187,271 | |||||||||
Real
Estate Construction
|
72,310 | 80,651 | 73,634 | |||||||||
Residential
1st
Mortgages
|
108,650 | 109,764 | 107,459 | |||||||||
Home
Equity Lines and Loans
|
64,499 | 65,953 | 66,641 | |||||||||
Agricultural
|
184,073 | 215,798 | 207,357 | |||||||||
Commercial
|
205,900 | 197,108 | 178,525 | |||||||||
Consumer
|
13,460 | 20,061 | 20,138 | |||||||||
Gross
Loans
|
1,123,963 | 1,143,150 | 1,087,946 | |||||||||
Less:
|
||||||||||||
Unearned
Income
|
2,098 | 2,181 | 2,507 | |||||||||
Allowance
for Loan Losses
|
18,682 | 18,483 | 17,930 | |||||||||
Net
Loans
|
$ | 1,103,183 | $ | 1,122,486 | $ | 1,067,509 |
(in
thousands)
|
Actual
|
Regulatory
Capital
Requirements
|
To
Be Well
Capitalized
Under
Prompt
Corrective
Action
Provisions
|
|||||||||||||||||||||
The
Company:
|
Amount
|
Ratio
|
Amount
|
Ratio
|
Amount
|
Ratio
|
||||||||||||||||||
As
of June 30, 2008
|
||||||||||||||||||||||||
Total
Capital to Risk Weighted Assets
|
$ | 174,771,353 | 12.67 | % | $ | 110,317,417 | 8.0 | % | N/A | N/A | ||||||||||||||
Tier
1 Capital to Risk Weighted Assets
|
$ | 157,514,670 | 11.42 | % | $ | 55,158,708 | 4.0 | % | N/A | N/A | ||||||||||||||
Tier
1 Capital to Average Assets
|
$ | 157,514,670 | 10.20 | % | $ | 61,746,644 | 4.0 | % | N/A | N/A |
(in
thousands)
|
Actual
|
Regulatory
Capital
Requirements
|
To
Be Well
Capitalized
Under
Prompt
Corrective
Action
Provisions
|
|||||||||||||||||||||
The
Bank:
|
Amount
|
Ratio
|
Amount
|
Ratio
|
Amount
|
Ratio
|
||||||||||||||||||
As
of June 30, 2008
|
||||||||||||||||||||||||
Total
Capital to Risk Weighted Assets
|
$ | 169,655,873 | 12.35 | % | $ | 109,913,859 | 8.0 | % | $ | 137,392,324 | 10.0 | % | ||||||||||||
Tier
1 Capital to Risk Weighted Assets
|
$ | 152,461,468 | 11.10 | % | $ | 54,956,929 | 4.0 | % | $ | 82,435,394 | 6.0 | % | ||||||||||||
Tier
1 Capital to Average Assets
|
$ | 152,461,468 | 9.92 | % | $ | 61,493,570 | 4.0 | % | $ | 76,866,963 | 5.0 | % |
§
|
then-existing
general economic and business conditions affecting the key lending areas
of the Company;
|
§
|
credit
quality trends (including trends in non-performing loans expected to
result from existing conditions);
|
§
|
collateral
values;
|
§
|
loan
volumes and concentrations;
|
§
|
seasoning
of the loan portfolio;
|
§
|
specific
industry conditions within portfolio
segments;
|
§
|
recent
loss experience within portfolio
segments;
|
§
|
duration
of the current business cycle;
|
§
|
bank
regulatory examination results; and
|
§
|
findings
of the Company’s internal credit
examiners.
|
Second
Quarter 2008
|
Number
of Shares
|
Average
Price per Share
|
Number
of Shares Purchased as Part of a Publicly Announced Plan or
Program
|
Approximate
Dollar Value of Shares that May Yet Be Purchased Under the Plan or
Program
|
||||||||||||
04/01/2008
- 04/30/2008
|
- | - | - | $ | 3,754,294 | |||||||||||
05/01/2008
- 05/31/2008
|
2,503 | 460.00 | 2,503 | 2,602,914 | ||||||||||||
06/01/2008
- 06/30/2008
|
151 | 460.00 | 151 | 2,533,454 | ||||||||||||
Total
|
2,654 | $ | 460.00 | 2,654 | $ | 2,533,454 |
Directors
|
For
|
%
|
Withheld
|
%
|
||||
S.
ADAMS
|
553,718
|
98.8%
|
6,515
|
1.2%
|
||||
R.
BURLINGTON
|
553,711
|
98.8%
|
6,522
|
1.2%
|
||||
E.
CORUM, JR
|
553,740
|
98.8%
|
6,493
|
1.2%
|
||||
O.
METTLER
|
548,127
|
97.8%
|
12,106
|
2.2%
|
||||
J.
PODESTA
|
553,711
|
98.8%
|
6,522
|
1.2%
|
||||
K.
SANGUINETTI
|
553,711
|
98.8%
|
6,522
|
1.2%
|
||||
K.
STEINWERT
|
548,002
|
97.8%
|
12,231
|
2.2%
|
||||
C.
SUESS
|
553,671
|
98.8%
|
6,562
|
1.2%
|
||||
C.
WISHEK, JR.
|
553,711
|
98.8%
|
6,522
|
1.2%
|
FARMERS
& MERCHANTS BANCORP
|
||
Date: August
7, 2008
|
/s/
Kent A. Steinwert
|
|
Kent
A. Steinwert
|
||
President
and
|
||
Chief
Executive Officer
|
||
(Principal
Executive Officer)
|
||
Date: August
7, 2008
|
/s/
Stephen W. Haley
|
|
Stephen
W. Haley
|
||
Executive
Vice President and
|
||
Chief
Financial Officer
|
||
(Principal
Accounting Officer)
|
Exhibit
No.
|
Description
|
3.3
|
Certificate
of Designation for the Series A Junior Participating Preferred Stock
(included as Exhibit A to the Rights Agreement between Farmers &
Merchants Bancorp and Registrar and Transfer Company, dated as of August
5, 2008, filed as Exhibit 4.1 below).
|
Rights
Agreement between Farmers & Merchants Bancorp and Registrar and
Transfer Company, dated as of August 5, 2008, including Form of Right
Certificate attached thereto as Exhibit B.
|
|
Certification
of the Chief Executive Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
|
|
Certification
of the Chief Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
|
|
Certifications
of the Chief Executive Officer and Chief Financial Officer pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
|