##### 



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, 2007
 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)
  (Registrants telephone number, including area code)
 þ o
  o o þ
 o þ




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Page(s)PART I. FINANCIAL INFORMATIONItem 1.     Financial Statements
    
    3-7Item 2.     Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    8-12Item 3.     Quantitative and Qualitative Disclosures About Market Risk
    
    12Item 4.     Controls and Procedures
    
    12-13PART II. OTHER INFORMATIONItem 1.     Legal Proceedings
    
    13Item 1A.  Risk Factors
    
    13Item 2.     Unregistered Sales of Equity Securities and Use of Proceeds
    
    13-14Item 3.     Defaults Upon Senior Securities
    
    14Item 4.     Submission of Matters to a Vote of Security Holders
    
    14Item 5.     Other Information
    
    14Item 6.     Exhibits
    
    14Exhibit 31.1  Rule 13a-14(a)/15d-14(a) Certification  Principal Executive Officer
    
    17Exhibit 31.2  Rule 13a-14(a)/15d-14(a) Certification  Principal Financial Officer
    
    18Exhibit 32  Section 1350 Certification  Principal Executive Officer and Principal
Financial Officer
    
    19Signatures
    
    15
 2




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March 31
    
    
    December 312007
    
    
    2006(Dollars in thousands, except par value)ASSETSCASH AND CASH EQUIVALENTSCash and due from banks
    
    $
    11,597
    
    
    
    11,843Federal funds sold
    
    
    4,750
    
    
    
    0Total cash and cash equivalents
    
    
    16,347
    
    
    
    11,843SECURITIESAvailable-for-sale, at fair value
    
    
    53,520
    
    
    
    57,273Held-to-maturity, at amortized cost, fair value of $1,028 in 2007 and $1,031 in 2006
    
    
    1,007
    
    
    
    1,011Restricted stock
    
    
    3,629
    
    
    
    3,629Total securities
    
    
    58,156
    
    
    
    61,913LOANS
    
    
    349,949
    
    
    
    357,278Less: Allowance for loan losses
    
    
    3,524
    
    
    
    3,600Net loans
    
    
    346,425
    
    
    
    353,678Premises and equipment, net
    
    
    8,112
    
    
    
    7,904Cash surrender value of life insurance
    
    
    9,964
    
    
    
    9,872Goodwill
    
    
    10,430
    
    
    
    10,430Core deposit intangible asset, net
    
    
    331
    
    
    
    346Accrued interest receivable
    
    
    2,171
    
    
    
    2,271Other assets
    
    
    760
    
    
    
    601TOTAL ASSETS
    
    $
    452,696
    
    
    $
    458,858LIABILITIES AND STOCKHOLDERS EQUITYLIABILITIESDeposits:Demand, non-interest bearing
    
    $
    44,313
    
    
    $
    49,745Savings, NOW and Money Market deposits
    
    
    162,972
    
    
    
    160,224Time
    
    
    159,744
    
    
    
    161,225Total deposits
    
    
    367,029
    
    
    
    371,194Federal funds purchased and securities sold under repurchase agreements
    
    
    12,985
    
    
    
    15,388Borrowed funds
    
    
    17,200
    
    
    
    17,600Dividends payable
    
    
    550
    
    
    
    536Other liabilities
    
    
    3,412
    
    
    
    2,977Total liabilities
    
    
    401,176
    
    
    
    407,695STOCKHOLDERS EQUITYCommon stock, $12.50 par value. Authorized 6,000,000 shares;
issued 1,914,109 shares
    
    
    23,926
    
    
    
    23,926Surplus
    
    
    176
    
    
    
    171Retained earnings
    
    
    32,664
    
    
    
    31,961Accumulated other comprehensive loss
    
    
    (120
    )
    
    
    (206
    )Treasury stock, 140,123 shares in 2006 and 128,403 shares in 2006, at cost
    
    
    (5,126
    )
    
    
    (4,689
    )Total stockholders equity
    
    
    51,520
    
    
    
    51,163TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    452,696
    
    
    $
    458,858
  3




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Three months endedMarch 312007
    
    
    2006(Dollars in thousands,except per share data)INTEREST INCOMELoans, including fees
    
    $
    6,227
    
    
    $
    5,667Securities:Obligations of U.S. Government agencies and corporations
    
    
    364
    
    
    
    538Obligations of states and political subdivisions
    
    
    196
    
    
    
    234Other
    
    
    70
    
    
    
    62Federal funds sold
    
    
    44
    
    
    
    1Total interest income
    
    
    6,901
    
    
    
    6,502INTEREST EXPENSEDeposits
    
    
    2,361
    
    
    
    1,697Other borrowings
    
    
    352
    
    
    
    400Total interest expense
    
    
    2,713
    
    
    
    2,097Net interest income
    
    
    4,188
    
    
    
    4,405PROVISION FOR LOAN LOSSES
    
    
    
    
    
    
    35Net interest income, after provision for loan losses
    
    
    4,188
    
    
    
    4,370NON-INTEREST INCOMETrust income
    
    
    208
    
    
    
    159Service charges on deposit accounts
    
    
    325
    
    
    
    324Other
    
    
    227
    
    
    
    220Total non-interest income
    
    
    760
    
    
    
    703NON-INTEREST EXPENSESSalaries, wages and employee benefits
    
    
    1,812
    
    
    
    1,804Occupancy of premises
    
    
    209
    
    
    
    201Amortization of core deposit intangible asset
    
    
    15
    
    
    
    14Other operating
    
    
    1,138
    
    
    
    1,048Total non-interest expenses
    
    
    3,174
    
    
    
    3,067Income before federal income taxes
    
    
    1,774
    
    
    
    2,006FEDERAL INCOME TAXES
    
    
    521
    
    
    
    588NET INCOME
    
    $
    1,253
    
    
    $
    1,418Net income per share, based on 1,780,766 shares in 2007 and
1,835,234 shares in 2006
    
    $
    0.70
    
    
    $
    0.77Dividends declared, based on 1,773,986 shares in 2007 and
1,828,328 shares in 2006
    
    $
    0.31
    
    
    $
    0.30
  4




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Three months endedMarch 312007
    
    
    2006(Dollars in thousands,except per share data)BALANCE AT BEGINNING OF PERIOD
    
    $
    51,163
    
    
    $
    49,931Comprehensive Income:Net income
    
    
    1,253
    
    
    
    1,418Change in net unrealized gain (loss) on securities available-for-sale,
net of reclassification adjustments and related income taxes
    
    
    86
    
    
    
    (229
    )Total comprehensive income
    
    
    1,339
    
    
    
    1,189Proceeds from issuance of treasury shares, 510 shares in 2007 and 602 shares in 2006
    
    
    19
    
    
    
    22Purchase of 12,230 treasury shares in 2007 and 16,500 shares in 2006
    
    
    (451
    )
    
    
    (615
    )Cash dividends declared, $.31 per share in 2007 and $.30 per share in 2006
    
    
    (550
    )
    
    
    (548
    )BALANCE AT END OF PERIOD
    
    $
    51,520
    
    
    $
    49,979
  5




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Three months endedMarch 312007
    
    
    2006(Dollars in thousands)NET CASH FLOW FROM OPERATING ACTIVITIES
    
    $
    1,845
    
    
    $
    1,856CASH FLOWS FROM INVESTING ACTIVITIESProceeds from maturities of securities
    
    
    3,816
    
    
    
    1,421Net decrease (increase) in loans
    
    
    7,221
    
    
    
    2,490Additions to premises and equipment
    
    
    (431
    )
    
    
    (185
    )Net cash from investing activities
    
    
    10,606
    
    
    
    3,726CASH FLOWS FROM FINANCING ACTIVITIESNet change in deposits
    
    
    (4,165
    )
    
    
    (7,392
    )Net change in federal funds purchased and securities sold under repurchase agreements
    
    
    (2,403
    )
    
    
    3,801Net change in borrowed funds
    
    
    (400
    )
    
    
    (2,300
    )Proceeds from issuance of treasury shares
    
    
    19
    
    
    
    22Cash dividends paid
    
    
    (536
    )
    
    
    (535
    )Purchase of treasury stock
    
    
    (451
    )
    
    
    (615
    )Payment of deferred compensation
    
    
    (11
    )
    
    
    (41
    )Net cash from financing activities
    
    
    (7,947
    )
    
    
    (7,060
    )NET CHANGE IN CASH AND CASH EQUIVALENTS
    
    
    4,504
    
    
    
    (1,478
    )CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
    
    
    11,843
    
    
    
    12,338CASH AND CASH EQUIVALENTS AT END OF PERIOD
    
    $
    16,347
    
    
    $
    10,860SUPPLEMENTAL DISCLOSURESCash paid during the year for:Interest
    
    $
    2,412
    
    
    $
    2,192Federal income taxes
    
    $
    120
    
    
    $
    50
  6




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7




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
        8




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9




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Three months ended
    
    Three months endedMarch 31, 2007
    
    March 31, 2006(Dollars in thousands)Provision for loan losses charged to expense
    
    $
    
    
    
    $
    35Net loan charge-offs
    
    
    76
    
    
    
    122Annualized net loan charge-offs as a percent
of average outstanding loans
    
    
    .09
    %
    
    
    .15
    %
  March 31, 2007
    
    
    December 31, 2006(Dollars in thousands)Nonaccrual loans
    
    $
    3,302
    
    
    $
    3,795Loans contractually past due 90 days or more
and still accruing interest
    
    
    374
    
    
    
    716Restructured loans
    
    
    30
    
    
    
    Potential problem loans, other than those past due
90 days or more, nonaccrual, or restructured
    
    
    10,452
    
    
    
    8,199Total potential problem and non-performing loans
    
    $
    14,158
    
    
    $
    12,710Allowance for loan losses
    
    $
    3,524
    
    
    $
    3,600Allowance for loan losses as a percent
of period-end loans
    
    
    1.01
    %
    
    
    1.01
    %
  10




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March 31,
    
    
    December 31,2007
    
    
    2006(Dollars in thousands)Potential problem loans not currently past due
    
    $
    5,775
    
    
    $
    5,260Potential problem loans past due one day or more but less than 10 days
    
    
    1,752
    
    
    
    843Potential problem loans past due 10 days or more but less than 30 days
    
    
    2,203
    
    
    
    745Potential problem loans past due 30 days or more but less than 60 days
    
    
    661
    
    
    
    1,175Potential problem loans past due 60 days or more but less than 90 days
    
    
    61
    
    
    
    176Total potential problem loans
    
    $
    10,452
    
    
    $
    8,199
  March 31,
    
    
    December 31,2007
    
    
    2006(Dollars in thousands)Collateralized by an interest in real property
    
    $
    7,766
    
    
    $
    6,679Collateralized by an interest in assets other than real property
    
    
    2,667
    
    
    
    1,500Unsecured
    
    
    19
    
    
    
    20Total potential problem loans
    
    $
    10,452
    
    
    $
    8,199
      11




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12




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(a)
    
    information required to be disclosed by Croghan in this Quarterly Report on Form 10-Q and the
other reports which Croghan files or submits under the Exchange Act would be accumulated and
communicated to Croghan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 Croghan in this Quarterly Report on Form 10-Q and the
other reports which Croghan 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)
    
    Croghans disclosure controls and procedures are effective as of the end of the period
covered by this Quarterly Report on Form 10-Q to ensure that material information relating to
Croghan and its consolidated subsidiary is made known to them, particularly during the period
for which our periodic reports, including this Quarterly Report on Form 10-Q, are being
prepared.
   
  
   
   
  (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, 2007:
 13




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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 (1)
    
    per Share
    
    or Programs
    
    or Programs (2)01/01/07
through
01/31/07
    
    None
    
    None
    
    None
    
    
    61,22402/01/07
through
02/28/07
    
    
    12,230
    
    
    $
    36.87
    
    
    
    12,230
    
    
    
    77,05603/01/07
through
03/31/07
    
    None
    
    None
    
    None
    
    
    77,056
 
 (1)
    
    All share purchases were part of publicly announced programs and all were open-market
transactions.(2)
    
    A stock buy-back program commencing on August 1, 2006 and ending on February 1, 2007 was
announced on July 18, 2006 (pursuant to which a total of 29,502 shares were purchased prior to
its expiration). A stock buy-back program commencing on February 4, 2007 and ending on August
4, 2007 was announced on January 16, 2007 in which up to 89,286 shares could be repurchased
(with 2,988 shares purchased on February 9, 2007; 1,800 shares purchased on February 21, 2007;
and 7,442 shares purchased on February 28, 2007). 
   
   
   
     14




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CROGHAN BANCSHARES, INC.
                     RegistrantDate: April 25, 2007
    By:
    /s/  Steven C. FutrellSteven C. Futrell, President and CEO(Principal Executive Officer)Date: April 25, 2007
    By:
    /s/  Kendall W. RiemanKendall W. Rieman, Treasurer(Principal Financial Officer) 15




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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
 16