EXHIBIT 20
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[FARMERS & MERCHANTS BANCORP, INC. LOGO]
REPORT TO SHAREHOLDERS
THIRD QUARTER
SEPTEMBER 30, 2004
a tradition of value
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MESSAGE FOR MANAGEMENT
October 20, 2004
Dear Shareholders:
Enclosed is your regular quarterly dividend of $.45 per share payable October
20, 2004, to shareholders of record September 10, 2004, along with the first
nine months Statement of Operations. Profits for the first nine months have been
strong and with your continued support and the efforts of our employees, we
hope to maintain this performance for the rest of the year.
After three years of historically low interest rates, with recent increases of
the prime rate by 75 basis points, they have now begun to rise. An increase of
50 more basis points is expected by the first quarter of next year in The
Federal Reserve's effort to keep inflation under control. The need for loans
continues and remains very competitive. The increase in the Federal Funds rate
is not having a negative impact on loan demand. The balance of the year will
remain very challenging; however, as always, we remain optimistic. We look
forward to maintaining our goals of sound, stable growth.
We are very pleased to announce that Daniel W. Schutt joined the bank as of
July 15, 2004 as Executive Vice President and Chief Loan Administrator. Dan and
his wife Rebecca live in Antwerp, Ohio having always resided in Northwest Ohio.
Please stop in the Main Office and introduce yourself to Dan at your
convenience. We are very pleased to have Dan as the newest member of the F & M
family.
Once again our Agricultural Staff purchased livestock at the Northwest Ohio
County Fairs (Fulton, Henry, Williams and Defiance) as well as the Hillsdale and
Lucas County Fairs. We are always pleased to show our support for our youth in
the agricultural field.
The directors, officers and staff thank you for your support and extend to you
our best wishes for the rest of the year.
Sincerely,
/s/ Joe E. Crossgrove
Joe E. Crossgrove
President/CEO
DIRECTORS AND OFFICERS OF
FARMERS & MERCHANTS BANCORP, INC.
DIRECTORS
EUGENE D BERNATH
Chairman of the Board
The Farmers & Merchants State Bank
DEXTER L. BENECKE
President, Viking Trucking
Vice President, SanJan, Inc.
JERRY L. BOYERS
President, Edifice Construction Management
JOE E. CROSSGROVE
President & Chief Executive Officer
The Farmers & Merchants State Bank
STEVEN A. EVERHART
Secretary/Treasurer, MCB Holding, Inc.
ROBERT G. FREY
President, E.H. Frey & Sons, Inc.
President, Yoder & Frey, Inc.
JACK C. JOHNSON
President, Hawk's Clothing, Inc.
Partner, REJO Partnership
DEAN E. MILLER
President, MBC Holdings, Inc.
ANTHONY J. RUPP
President, Rupp Furniture Co.
DAVID P RUPP, JR.
Attorney, Plassman, Rupp, Hensal, Short & Hagans
JAMES C. SANEHOLTZ
President, Saneholtz-McKarns,Inc.
KEVIN J. SAUDER
President & CEO, Sauder Woodworking Company
MERLE J. SHORT
President, Promow, Inc.
STEVEN J. WYSE
President, SteelinQ Systems, Inc.
OFFICERS
EUGENE D. BERNATH
Chairman of the Board
JOE E. CROSSGROVE
President, Chief Executive Officer & Treasurer
DEAN E. MILLER
Vice Chairman of the Board
DAVID P. RUPP, JR.
Vice President
BARBARA J. BRITENRIKER
Chief Financial Officer
CAROL J. ENGLAND
Secretary
LYDIA A. HUBER
Assistant Secretary
DAVID W. KOWALSKI
Senior Auditor
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CONSOLIDATED BALANCE SHEET
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SEPTEMBER 30, DECEMBER 31, SEPTEMBER 30,
2004 2003 2003
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(UNAUDITED) (DOLLARS IN THOUSANDS)
ASSETS:
Cash and due from banks $ 15,397 $ 18,873 $ 15,531
Interest Bearing Deposits in Other Banks 1,740 662 608
Investment Securities
U.S. Treasury 2,913 6,637 2,823
U.S. Government Agencies 106,631 111,011 113,212
State & Political Subdivisions 56,350 51,016 53,297
All Others 3,617 2,028 1,973
Federal Funds Sold & Securities Purchased
Under Agreement to Resell 0 0 0
Loans & Leases 488,784 480,339 489,928
Bank Premises and Equipment 15,520 15,874 15,906
Accrued Interest and Other Assets 14,539 19,263 18,526
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TOTAL ASSETS $705,491 $705,703 $711,804
LIABILITIES:
Deposits
Non-interest bearing 47,953 50,710 42,623
Interest bearing 530,708 524,356 528,553
Federal Funds Purchased & Securities Sold
Under Agreement to Repurchase 21,664 27,319 29,531
Other Borrowed Money 23,248 24,374 27,139
Accrued Interest and Other Liabilities 3,637 4,088 10,290
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TOTAL LIABILITIES $627,210 $630,847 $638,136
SHAREHOLDER'S EQUITY:
Common Stock, no par value -
Authorized 1,500,000 shares;
issued 1,300,000 shares 12,677 12,677 12,677
Undivided Profits 64,629 60,196 58,831
Accumulated other comprehensive income 975 1,983 2,160
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TOTAL SHAREHOLDER'S EQUITY 78,281 74,856 73,668
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TOTAL LIABILITIES &
SHAREHOLDER'S EQUITY $705,491 $705,703 $711,804
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CONSOLIDATED STATEMENT OF EARNINGS
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THIRD QUARTER THIRD QUARTER NINE MONTHS NINE MONTHS
ENDED SEPT. 30, ENDED SEPT. 30, ENDED SEPT. 30, ENDED SEPT. 30,
2004 2003 2004 2003
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(UNAUDITED) (DOLLARS IN THOUSANDS) (UNAUDITED) (DOLLARS IN THOUSANDS)
Interest income $ 9,249 $ 10,182 $ 27,920 $ 31,268
Interest expense 2,759 3,361 8,284 11,297
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Net Interest Income 6,490 6,821 19,636 19,971
Provision for loan losses 150 675 941 5,373
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Net interest income after provision for loan losses 6,340 6,146 18,695 14,598
Non interest income 1,374 1,589 3,866 5,033
Non interest expense 4,644 4,044 13,744 12,380
Income tax expense 929 1,100 2,629 1,691
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NET INCOME 2,141 2,591 6,188 5,560
Net income per share based on 1,300,000 outstanding shares $ 1.65 $ 1.99 $ 4.76 $ 4.28
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Other comprehensive income, net of tax: Unrealized gains
(losses) on loans and securities held as available for sale 1,397 (1,529) (1,008) (1,556)
Comprehensive Income $ 3,538 $ 1,062 $ 5,180 $ 4,004
"This Statement has not been reviewed, or confirmed for accuracy or relevance,
by the Federal Deposit Insurance Corporation."
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FARMERS & MERCHANTS BANCORP, INC.
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ARCHBOLD
Main Office Woodland Office
307-11 N. Defiance St. 1313 S. Defiance St.
Archbold, Ohio 43502 Archbold, Ohio 43502
(419)466-2501 (419)446-2531
Operations Center
620 S. Clyde's Way
Archbold, Ohio 43502
(419)446-2501
WAUSEON
North Shoop Office Downtown Office
1130 N. Shoop Ave. 119 N. Fulton St.
Wauseon, Ohio 43567 Wauseon, Ohio 43567
(419)337-2010 (419)337-3085
BRYAN
East High Office SouthTowne Office
929 E. High St. 1000 S. Main St.
Bryan, Ohio 43506 Bryan, Ohio 43506
(419)636-9011 (419)636-6104
STRYKER WEST UNITY
300 S. Defiance St. 200 W. Jackson St.
Stryker, Ohio 43557 West Unity, Ohio 43570
(419)682-3411 (419)924-2321
DELTA NAPOLEON
101 Main St. 2255 N. Scott St.
Delta, Ohio 43515 Napoleon, Ohio 43545
(419)822-9510 (419)592-2077
MONTPELIER
West Main Office Eastside Office
225 W. Main St. 1150 E. Main St.
Montpelier, Ohio 43543 Montpelier, Ohio 43543
(419)485-8387 (419)485-1363
SWANTON DEFIANCE
7 Turtle Creek Circle 1175 Hotel Drive
Swanton, Ohio 43558 Defiance, Ohio 43512
(419)825-3339 (419)782-9421
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