##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, DC 20549
 FORM 10-Q
 Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the quarterly period ended March 31, 2010
 0-20159   (Commission File Number)
 CROGHAN BANCSHARES, INC.
 
 Ohio
    
    31-1073048(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)323 Croghan Street, Fremont, Ohio
    
    43420(Address of principal executive offices)
    
    (Zip Code)
 
 þ o
 o o
  Large accelerated filer o
Accelerated filer o
Non-accelerated filer o(Do not check if a smaller reporting company)
Smaller reporting Company þ o þ




---



##### 



Page(s)PART I. FINANCIAL INFORMATION
    
    3Item 1.
    
    Financial Statements
    
    3 - 12Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    13 -17Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    18Item 4.
    
    Controls and Procedures
    
    18PART II. OTHER INFORMATION
    
    18Item 1.
    
    Legal Proceedings
    
    18Item 1A.
    
    Risk Factors
    
    19Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    19Item 3.
    
    Defaults Upon Senior Securities
    
    20Item 4.
    
    Other Information
    
    20Item 5.
    
    Exhibits
    
    20Signatures
    
    21EX-31.1EX-31.2EX-32
  2




---



##### Table of Contents



March 31
    
    
    December 312010
    
    
    2009(Dollars in thousands, except par value)ASSETSCASH AND CASH EQUIVALENTSCash and due from banks
    
    $
    11,968
    
    
    
    15,928Interest-bearing deposits due from banks
    
    
    9,743
    
    
    
    796Total cash and cash equivalents
    
    
    21,711
    
    
    
    16,724SECURITIESAvailable-for-sale, at fair value
    
    
    108,790
    
    
    
    105,792Held-to-maturity, at amortized cost, fair value of $521 in 2010 and $526 in 2009
    
    
    502
    
    
    
    502Restricted stock
    
    
    3,844
    
    
    
    3,844Total securities
    
    
    113,136
    
    
    
    110,138LOANS
    
    
    314,139
    
    
    
    324,484Less: Allowance for loan losses
    
    
    4,896
    
    
    
    4,433Net loans
    
    
    309,243
    
    
    
    320,051Premises and equipment, net
    
    
    6,733
    
    
    
    6,863Cash surrender value of life insurance
    
    
    11,033
    
    
    
    10,946Goodwill
    
    
    10,430
    
    
    
    10,430Core deposit intangible asset, net
    
    
    158
    
    
    
    173Accrued interest receivable
    
    
    2,073
    
    
    
    1,857Other real estate owned
    
    
    2,330
    
    
    
    2,330Other assets
    
    
    2,553
    
    
    
    2,476TOTAL ASSETS
    
    $
    479,400
    
    
    $
    481,988LIABILITIES AND STOCKHOLDERS EQUITYLIABILITIESDeposits:Demand, non-interest bearing
    
    $
    50,865
    
    
    $
    60,072Savings, NOW, and Money Market deposits
    
    
    168,171
    
    
    
    159,316Time
    
    
    148,790
    
    
    
    151,331Total deposits
    
    
    367,826
    
    
    
    370,719Federal funds purchased and securities sold under repurchase agreements
    
    
    16,736
    
    
    
    16,375Federal Home Loan Bank borrowings
    
    
    35,500
    
    
    
    35,500Dividends payable
    
    
    545
    
    
    
    549Other liabilities
    
    
    2,444
    
    
    
    2,718Total liabilities
    
    
    423,051
    
    
    
    425,861STOCKHOLDERS EQUITYCommon stock, $12.50 par value. Authorized 6,000,000 shares;issued 1,914,109 shares
    
    
    23,926
    
    
    
    23,926Surplus
    
    
    179
    
    
    
    179Retained earnings
    
    
    38,574
    
    
    
    38,187Accumulated other comprehensive income
    
    
    1,138
    
    
    
    1,044Treasury stock, 210,991 shares in 2010 and 200,232 shares in 2009, at cost
    
    
    (7,468
    )
    
    
    (7,209
    )Total stockholders equity
    
    
    56,349
    
    
    
    56,127TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    479,400
    
    
    $
    481,988
  3




---



##### Table of Contents



Three months endedMarch 312010
    
    
    2009(Dollars in thousands,except per share data)INTEREST INCOMELoans, including fees
    
    $
    4,627
    
    
    $
    5,196Securities:Obligations of U.S. Government agencies and corporations
    
    
    693
    
    
    
    540Obligations of states and political subdivisions
    
    
    367
    
    
    
    217Other
    
    
    56
    
    
    
    56Deposits in other banks
    
    
    5
    
    
    
    5Total interest income
    
    
    5,748
    
    
    
    6,014INTEREST EXPENSEDeposits
    
    
    997
    
    
    
    1,261Other borrowings
    
    
    341
    
    
    
    384Total interest expense
    
    
    1,338
    
    
    
    1,645Net interest income
    
    
    4,410
    
    
    
    4,369PROVISION FOR LOAN LOSSES
    
    
    500
    
    
    
    600Net interest income, after
provision for loan losses
    
    
    3,910
    
    
    
    3,769NON-INTEREST INCOMEGain on sale of loans
    
    
    30
    
    
    
    56Trust income
    
    
    255
    
    
    
    219Service charges on deposit accounts
    
    
    339
    
    
    
    364Other
    
    
    228
    
    
    
    214Total non-interest income
    
    
    852
    
    
    
    853NON-INTEREST EXPENSESSalaries, wages, and employee benefits
    
    
    1,996
    
    
    
    1,939Occupancy of premises
    
    
    226
    
    
    
    238Amortization of core deposit intangible asset
    
    
    14
    
    
    
    14Other operating
    
    
    1,327
    
    
    
    1,255Total non-interest expenses
    
    
    3,563
    
    
    
    3,446Income before federal income taxes
    
    
    1,199
    
    
    
    1,176FEDERAL INCOME TAXES
    
    
    267
    
    
    
    305NET INCOME
    
    $
    932
    
    
    $
    871Net income per share, based on 1,708,015 shares in 2010 and
1,720,659 shares in 2009
    
    $
    0.55
    
    
    $
    0.51Dividends declared
    
    $
    0.32
    
    
    $
    0.32
  4




---



##### Table of Contents



Three months endedMarch 312010
    
    
    2009(Dollars in thousands,except per share data)BALANCE AT BEGINNING OF PERIOD
    
    $
    56,127
    
    
    $
    54,819Comprehensive Income:Net income
    
    
    932
    
    
    
    871Change in net unrealized gain on securities
available-for-sale,net of reclassification adjustments and related
income taxes
    
    
    94
    
    
    
    208Total comprehensive income
    
    
    1,026
    
    
    
    1,079Purchase of 10,759 treasury shares in 2010 and 528 in 2009
    
    
    (259
    )
    
    
    (13
    )Cash dividends declared, $.32 per share in 2010 and 2009
    
    
    (545
    )
    
    
    (551
    )BALANCE AT END OF PERIOD
    
    $
    56,349
    
    
    $
    55,334
  5




---



##### Table of Contents



Three months endedMarch 312010
    
    
    2009(Dollars in thousands)NET CASH FLOW FROM OPERATING ACTIVITIES
    
    $
    1,207
    
    
    $
    1,844CASH FLOWS FROM INVESTING ACTIVITIESProceeds from maturities of securities
    
    
    4,698
    
    
    
    6,298Purchases of available-for-sale securities
    
    
    (7,723
    )
    
    
    (4,168
    )Net decrease in loans
    
    
    10,295
    
    
    
    9,074Additions to premises and equipment
    
    
    (78
    )
    
    
    (76
    )Net cash from investing activities
    
    
    7,192
    
    
    
    11,128CASH FLOWS FROM FINANCING ACTIVITIESNet change in deposits
    
    
    (2,893
    )
    
    
    6,408Net change in federal funds purchased and securities sold
under agreements to repurchase
    
    
    361
    
    
    
    (6,409
    )Net change in borrowed funds
    
    
    
    
    
    
    (4,000
    )Cash dividends paid
    
    
    (549
    )
    
    
    (551
    )Purchase of treasury stock
    
    
    (259
    )
    
    
    (13
    )Payment of deferred compensation
    
    
    (72
    )
    
    
    (498
    )Net cash from financing activities
    
    
    (3,412
    )
    
    
    (5,063
    )NET CHANGE IN CASH AND CASH EQUIVALENTS
    
    
    4,987
    
    
    
    7,909CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
    
    
    16,724
    
    
    
    10,132CASH AND CASH EQUIVALENTS AT END OF PERIOD
    
    $
    21,711
    
    
    $
    18,041SUPPLEMENTAL CASH FLOW DISCLOSURESCash paid during the year for:Interest
    
    $
    1,394
    
    
    $
    1,788Federal income taxes
    
    $
    21
    
    
    $
    20NON-CASH OPERATING ACTIVITY:Change in deferred income taxes on net unrealized gain on
available-for-sale securities
    
    $
    (48
    )
    
    $
    (107
    )NON-CASH INVESTING ACTIVITY:Change in net unrealized gain on available-for-sale securities
    
    $
    142
    
    
    $
    315NON-CASH OPERATING AND INVESTING ACTIVITY:Transfer of loans to other real estate owned
    
    $
    13
    
    
    $
    200
  6




---



##### Table of Contents



CROGHAN BANCSHARES, INC.
Notes to Consolidated Financial Statements
March 31, 2010
(Unaudited)
 NOTE 1  CONSOLIDATED FINANCIAL STATEMENTS
    NOTE 2  NEW ACCOUNTING PRONOUNCEMENTS
 The FASB Accounting Standards Codification and the
Hierarchy of Generally Accepted Accounting Principles
 7




---



##### Table of Contents



Fair Value Measurements
and Disclosures
 8




---



##### Table of Contents



NOTE 3  FAIR VALUE OF FINANCIAL INSTRUMENTS
  March 31, 2010
    
    
    December 31, 2009Carrying
    
    
    Estimated fair
    
    
    Carrying
    
    
    Estimated fairamount
    
    
    value
    
    
    amount
    
    
    value(Dollars in thousands)FINANCIAL ASSETSCash and cash equivalents
    
    $
    21,711
    
    
    
    $  21,711
    
    
    $
    16,724
    
    
    
    $  16,724Securities
    
    
    113,136
    
    
    
    113,141
    
    
    
    110,138
    
    
    
    110,162Loans, net
    
    
    309,243
    
    
    
    309,553
    
    
    
    320,051
    
    
    
    320,047Total
    
    $
    444,090
    
    
    
    $444,405
    
    
    $
    446,913
    
    
    
    $446,933FINANCIAL LIABILITIESDeposits
    
    $
    367,826
    
    
    
    $369,640
    
    
    $
    370,719
    
    
    
    $372,312Federal funds purchased and
securities sold under
repurchase agreements
    
    
    16,736
    
    
    
    16,658
    
    
    
    16,375
    
    
    
    16,327Federal Home Loan Bank
borrowings
    
    
    35,500
    
    
    
    37,012
    
    
    
    35,500
    
    
    
    37,108Total
    
    $
    420,062
    
    
    
    $423,310
    
    
    $
    422,594
    
    
    
    $425,747
    Cash and Cash Equivalents
  Securities
  9




---



##### Table of Contents



Loans
  Deposit Liabilities
  Other Financial Instruments
   10




---



##### Table of Contents



NOTE 4  SECURITIES
  March 31, 2010
    
    
    December 31, 2009Amortized
    
    
    Fair
    
    
    Amortized
    
    
    Faircost
    
    
    value
    
    
    cost
    
    
    valueObligations of U.S. Government
agencies and corporations
    
    $
    66,941
    
    
    $
    67,977
    
    
    $
    65,927
    
    
    $
    66,729Obligations of states and
political subdivisions
    
    
    39,775
    
    
    
    40,463
    
    
    
    37,933
    
    
    
    38,713Other
    
    
    350
    
    
    
    350
    
    
    
    350
    
    
    
    350Total available-for-sale
    
    
    107,066
    
    
    
    108,790
    
    
    
    104,210
    
    
    
    105,792Held-to-maturity  corporate
debt obligation
    
    
    502
    
    
    
    521
    
    
    
    502
    
    
    
    526Restricted stock
    
    
    3,844
    
    
    
    3,844
    
    
    
    3,844
    
    
    
    3,844Total
    
    $
    111,412
    
    
    $
    113,155
    
    
    $
    108,556
    
    
    $
    110,162
  March 31, 2010
    
    
    December 31, 2009Gross
    
    
    Gross
    
    
    Gross
    
    
    Grossunrealized
    
    
    unrealized
    
    
    unrealized
    
    
    unrealizedgains
    
    
    losses
    
    
    gains
    
    
    lossesObligations of U.S. Government
agencies and corporations
    
    $
    1,266
    
    
    $
    230
    
    
    $
    1,153
    
    
    $
    351Obligations of states and
political subdivisions
    
    
    805
    
    
    
    117
    
    
    
    871
    
    
    
    91Total available-for-sale
    
    
    2,071
    
    
    
    347
    
    
    
    2,024
    
    
    
    442Held-to-maturity  corporate
debt obligation
    
    
    19
    
    
    
    
    
    
    
    24
    
    
    
    Total
    
    $
    2,090
    
    
    $
    347
    
    
    $
    2,048
    
    
    $
    442
 11




---



##### Table of Contents



NOTE 5  OTHER COMPREHENSIVE INCOME
  2010
    
    
    2009Unrealized gains on available-for-sale securities
    
    $
    1,724
    
    
    $
    1,029Tax effect
    
    
    586
    
    
    
    350Net-of-tax amount
    
    $
    1,138
    
    
    $
    679
 12




---



##### Table of Contents



ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
   PERFORMANCE SUMMARY
   FINANCIAL POSITION
  13




---



##### Table of Contents



NET INTEREST INCOME
  PROVISION FOR LOAN LOSSES AND THE ALLOWANCE FOR LOAN LOSSES
  14




---



##### Table of Contents



Three months ended
    
    Three months endedMarch 31, 2010
    
    March 31, 2009(Dollars in thousands)Provision for loan losses charged to expense
    
    $
    500
    
    
    $
    600Net loan charge-offs
    
    
    37
    
    
    
    71Annualized net loan charge-offs as a percent
of average outstanding loans
    
    
    .01
    %
    
    
    .02
    %
  March 31, 2010
    
    
    December 31, 2009(Dollars in thousands)Nonaccrual loans
    
    
    $3,812
    
    
    
    $5,903Loans contractually past due 90 days or more
and still accruing interest
    
    
    437
    
    
    
    45Restructured loans
    
    
    3,604
    
    
    
    3,191Potential problem loans, other than those past due
90 days or more, nonaccrual, or restructured
    
    
    22,341
    
    
    
    22,227Total potential problem and non-performing loans
    
    
    $30,194
    
    
    
    $31,366Allowance for loan losses
    
    
    $4,896
    
    
    
    $4,433Allowance for loan losses as a percent
of period-end loans
    
    
    1.56
    %
    
    
    1.37
    %
   15




---



##### Table of Contents



March 31,
    
    
    December 31,2010
    
    
    2009(Dollars in thousands)Potential problem loans not currently past due
    
    $
    18,149
    
    
    
    $16,453Potential problem loans past due one day or more but less than 10 days
    
    
    276
    
    
    
    186Potential problem loans past due 10 days or more but less than 30 days
    
    
    2,719
    
    
    
    4,833Potential problem loans past due 30 days or more but less than 60 days
    
    
    880
    
    
    
    528Potential problem loans past due 60 days or more but less than 90 days
    
    
    317
    
    
    
    227Total potential problem loans
    
    $
    22,341
    
    
    
    $22,227
   March 31,
    
    
    December 31,2010
    
    
    2009(Dollars in thousands)Collateralized by an interest in real property
    
    $
    21,747
    
    
    
    $21,622Collateralized by an interest in assets other than real property
    
    
    587
    
    
    
    600Unsecured
    
    
    7
    
    
    
    5Total potential problem loans
    
    $
    22,341
    
    
    
    $22,227
  16




---



##### Table of Contents



NON-INTEREST INCOME
  NON-INTEREST EXPENSES
   FEDERAL INCOME TAX EXPENSE
  LIQUIDITY AND CAPITAL RESOURCES
     17




---



##### Table of Contents



EVALUATION OF CONTROLS AND PROCEDURES
  (a)
    
    information required to be disclosed by the Corporation in this Quarterly Report on Form 10-Q
and the other reports which the Corporation files or submits under the Exchange Act would be
accumulated and communicated to the Corporations management, including its principal executive
officer and principal financial officer, as appropriate, to allow timely decisions regarding
required disclosure;(b)
    
    information required to be disclosed by the Corporation in this Quarterly Report on Form 10-Q
and the other reports which the Corporation files or submits under the Exchange Act would be
recorded, processed, summarized, and reported within the time periods specified in the SECs rules
and forms; and(c)
    
    the Corporations disclosure controls and procedures were effective as of the end of the period
covered by this Quarterly Report on Form 10-Q.
 CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
  
  
   18




---



##### Table of Contents



(a)
    
    Not applicable(b)
    
    Not applicable(c)
    
    The table below includes certain information regarding Croghans repurchase of its common
shares during the quarterly period ended March 31, 2010:
 Total Number of
    
    Maximum NumberShares Purchased
    
    of Shares that MayTotal Number
    
    Average
    
    as Part of Publicly
    
    Yet Be Purchasedof Shares
    
    Price Paid
    
    Announced Plans
    
    Under the PlansPeriod
    
    Purchased
    
    per Share
    
    or Programs
    
    or Programs (1)01/01/10
through
01/31/10
    
    None
    
    None
    
    None
    
    79,56302/01/10
through
02/28/10
    
    10,759
    
    $24.03
    
    10,759
    
    74,93403/01/10
through
03/31/10
    
    None
    
    None
    
    None
    
    74,934
 (1)
    
    An extension of Croghans stock repurchase program was approved on July 14, 2009, in which up
to 86,016 shares could be repurchased from August 1, 2009 to February 1, 2010 (with a total of
6,453 shares being repurchased prior to its expiration). An extension of Croghans stock
repurchase program commencing February 1, 2010 and ending August 1, 2010 was announced on
January 28, 2010, in which up to 85,693 shares may be repurchased (with 9,609 shares purchased
on February 10, 2010 and 1,150 shares purchased on February 19, 2010).
 19




---



##### Table of Contents



20




---



##### Table of Contents



CROGHAN BANCSHARES, INC.
               RegistrantDate:      April 28, 2010
    By:
    /s/  Steven C. FutrellSteven C. Futrell, President and CEO(Principal Executive Officer)Date:      April 28, 2010
    By:
    /s/  Kendall W. RiemanKendall W. Rieman, Treasurer(Principal Financial Officer) 21




---



##### Table of Contents



Exhibit Number
    
    Description
    
    Exhibit Location31.1
    
    
    Rule 13a-14(a)/15d-14(a)
Certification  Principal Executive
Officer
    
    Filed herewith31.2
    
    
    Rule 13a-14(a)/15d-14(a)
Certification  Principal Financial
Officer
    
    Filed herewith32
    
    
    Section 1350 Certification 
Principal Executive Officer and
Principal Financial Officer
    
    Filed herewith