##### 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 September 30, 2007
 0-20159
 (Commission File Number)
 CROGHAN BANCSHARES, INC.
  Ohio
    
    31-1073048(State or other jurisdiction of 
incorporation or organization)
    
    (I.R.S. Employer
Identification No.)
 323 Croghan Street, Fremont, Ohio
    
    43420(Address of principal executive offices)
    
    (Zip Code)
  
  þ o
  o o þ
 o þ




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##### 



Page(s)PART I. FINANCIAL INFORMATIONItem 1.
    
    Financial Statements
    
    3 - 8Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    9 - 14Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    14Item 4.
    
    Controls and Procedures
    
    14PART II. OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    14Item 1A.
    
    Risk Factors
    
    15Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    15Item 3.
    
    Defaults Upon Senior Securities
    
    16Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    16Item 5.
    
    Other Information
    
    16Item 6.
    
    Exhibits
    
    17Signatures
    
    18EX-31.1EX-31.2EX-32
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September 30
    
    
    December 312007
    
    
    2006(Dollars in thousands, except par value)ASSETSCASH AND CASH EQUIVALENTS
    
    $
    12,000
    
    
    
    11,843SECURITIESAvailable-for-sale, at fair value
    
    
    49,307
    
    
    
    57,273Held-to-maturity, at amortized cost, fair value of $526 in 2007 and $1,031 in 2006
    
    
    506
    
    
    
    1,011Restricted stock
    
    
    3,629
    
    
    
    3,629Total securities
    
    
    53,442
    
    
    
    61,913LOANS
    
    
    345,493
    
    
    
    357,278Less: Allowance for loan losses
    
    
    3,368
    
    
    
    3,600Net loans
    
    
    342,125
    
    
    
    353,678Premises and equipment, net
    
    
    7,811
    
    
    
    7,904Cash surrender value of life insurance
    
    
    10,128
    
    
    
    9,872Goodwill
    
    
    10,430
    
    
    
    10,430Core deposit intangible asset, net
    
    
    303
    
    
    
    346Accrued interest receivable
    
    
    2,196
    
    
    
    2,271Other assets
    
    
    801
    
    
    
    601TOTAL ASSETS
    
    $
    439,236
    
    
    $
    458,858LIABILITIES AND STOCKHOLDERS EQUITYLIABILITIESDeposits:Demand, non-interest bearing
    
    $
    47,580
    
    
    $
    49,745Savings, NOW and Money Market deposits
    
    
    157,899
    
    
    
    160,224Time
    
    
    151,182
    
    
    
    161,225Total deposits
    
    
    356,661
    
    
    
    371,194Federal funds purchased and securities sold under repurchase agreements
    
    
    11,659
    
    
    
    15,388Borrowed funds
    
    
    14,700
    
    
    
    17,600Dividends payable
    
    
    544
    
    
    
    536Other liabilities
    
    
    2,972
    
    
    
    2,977Total liabilities
    
    
    386,536
    
    
    
    407,695STOCKHOLDERS EQUITYCommon stock, $12.50 par value. Authorized 6,000,000 shares;
issued 1,914,109 shares
    
    
    23,926
    
    
    
    23,926Surplus
    
    
    179
    
    
    
    171Retained earnings
    
    
    34,470
    
    
    
    31,961Accumulated other comprehensive loss
    
    
    (8
    )
    
    
    (206
    )Treasury stock, 158,610 shares in 2007 and 128,403 shares in 2006, at cost
    
    
    (5,867
    )
    
    
    (4,689
    )Total stockholders equity
    
    
    52,700
    
    
    
    51,163TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    439,236
    
    
    $
    458,858
 See notes to consolidated financial statements.
 3




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Three months endedSeptember 302007
    
    
    2006(Dollars in thousands,except per share data)INTEREST INCOMELoans, including fees
    
    $
    6,329
    
    
    $
    6,093Securities:Obligations of U.S. Government agencies and corporations
    
    
    304
    
    
    
    378Obligations of states and political subdivisions
    
    
    189
    
    
    
    222Other
    
    
    66
    
    
    
    63Federal funds sold
    
    
    99
    
    
    
    37Total interest income
    
    
    6,987
    
    
    
    6,793INTEREST EXPENSEDeposits
    
    
    2,339
    
    
    
    2,243Other borrowings
    
    
    263
    
    
    
    287Total interest expense
    
    
    2,602
    
    
    
    2,530Net interest income
    
    
    4,385
    
    
    
    4,263PROVISION FOR LOAN LOSSES
    
    
    
    
    
    
    230Net interest income, after provision for loan losses
    
    
    4,385
    
    
    
    4,033NON-INTEREST INCOMETrust income
    
    
    240
    
    
    
    198Service charges on deposit accounts
    
    
    428
    
    
    
    364Other
    
    
    233
    
    
    
    224Total non-interest income
    
    
    901
    
    
    
    786NON-INTEREST EXPENSESSalaries, wages and employee benefits
    
    
    1,775
    
    
    
    1,610Occupancy of premises
    
    
    212
    
    
    
    193Amortization of core deposit intangible asset
    
    
    14
    
    
    
    14Other operating
    
    
    1,149
    
    
    
    1,189Total non-interest expenses
    
    
    3,150
    
    
    
    3,006Income before federal income taxes
    
    
    2,136
    
    
    
    1,813FEDERAL INCOME TAXES
    
    
    649
    
    
    
    529NET INCOME
    
    $
    1,487
    
    
    $
    1,284Net income per share, based on 1,756,397 shares in 2007 and 1,806,207 shares in 2006
    
    $
    0.85
    
    
    $
    0.71Dividends declared, based on 1,755,499 shares in 2007 and 1,799,313 shares in 2006
    
    $
    0.31
    
    
    $
    0.30
 See notes to consolidated financial statements.
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Nine months endedSeptember 302007
    
    
    2006(Dollars in thousands,except per share data)INTEREST INCOMELoans, including fees
    
    $
    18,947
    
    
    $
    17,670Securities:Obligations of U.S. Government agencies and corporations
    
    
    1,003
    
    
    
    1,373Obligations of states and political subdivisions
    
    
    578
    
    
    
    685Other
    
    
    202
    
    
    
    187Federal funds sold
    
    
    175
    
    
    
    50Total interest income
    
    
    20,905
    
    
    
    19,965INTEREST EXPENSEDeposits
    
    
    7,047
    
    
    
    5,861Other borrowings
    
    
    915
    
    
    
    1,067Total interest expense
    
    
    7,962
    
    
    
    6,928Net interest income
    
    
    12,943
    
    
    
    13,037PROVISION FOR LOAN LOSSES
    
    
    
    
    
    
    280Net interest income, after provision for loan losses
    
    
    12,943
    
    
    
    12,757NON-INTEREST INCOMETrust income
    
    
    665
    
    
    
    533Service charges on deposit accounts
    
    
    1,122
    
    
    
    1,040Gain (loss) on sale of securities
    
    
    
    
    
    
    1Other
    
    
    692
    
    
    
    673Total non-interest income
    
    
    2,479
    
    
    
    2,247NON-INTEREST EXPENSESSalaries, wages and employee benefits
    
    
    5,378
    
    
    
    5,145Occupancy of premises
    
    
    620
    
    
    
    579Amortization of core deposit intangible asset
    
    
    43
    
    
    
    43Other operating
    
    
    3,462
    
    
    
    3,376Total non-interest expenses
    
    
    9,503
    
    
    
    9,143Income before federal income taxes
    
    
    5,919
    
    
    
    5,861FEDERAL INCOME TAXES
    
    
    1,771
    
    
    
    1,722NET INCOME
    
    $
    4,148
    
    
    $
    4,139Net income per share, based on 1,767,669 shares in 2007 and 1,820,653 shares in 2006
    
    $
    2.35
    
    
    $
    2.27Dividends declared per share
    
    $
    0.93
    
    
    $
    0.90
 See notes to consolidated financial statements.
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Three months endedSeptember 302007
    
    
    2006(Dollars in thousands,except per share data)BALANCE AT BEGINNING OF PERIOD
    
    $
    51,544
    
    
    $
    50,148Comprehensive Income:Net income
    
    
    1,487
    
    
    
    1,284Change in net unrealized
loss on securities
available-for-sale,
net of reclassification
adjustments and related
income taxes
    
    
    285
    
    
    
    543Total comprehensive income
    
    
    1,772
    
    
    
    1,827Proceeds from issuance of 340 treasury shares
    
    
    
    
    
    
    13Purchase of 1,795 treasury shares in 2007 and 15,502 shares in 2006
    
    
    (72
    )
    
    
    (584
    )Cash dividends declared, $.31 per share in 2007 and $.30 per share in 2006
    
    
    (544
    )
    
    
    (540
    )BALANCE AT END OF PERIOD
    
    $
    52,700
    
    
    $
    50,864
  Nine months endedSeptember 302007
    
    
    2006(Dollars in thousands,except per share data)BALANCE AT BEGINNING OF PERIOD
    
    $
    51,163
    
    
    $
    49,931Comprehensive Income:Net income
    
    
    4,148
    
    
    
    4,139Change in net unrealized
loss on securities
available-for-sale,
net of reclassification adjustments and related
income taxes
    
    
    198
    
    
    
    110Total comprehensive income
    
    
    4,346
    
    
    
    4,249Proceeds from issuance of treasury shares, 763 shares in 2007 and 1,217 shares in 2006
    
    
    29
    
    
    
    45Purchase of treasury shares, 30,970 shares in 2007 and 46,130 shares in 2006
    
    
    (1,199
    )
    
    
    (1,729
    )Cash dividends declared, $.93 per share in 2007 and $.90 per share in 2006
    
    
    (1,639
    )
    
    
    (1,632
    )BALANCE AT END OF PERIOD
    
    $
    52,700
    
    
    $
    50,864
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Nine months endedSeptember 302007
    
    
    2006(Dollars in thousands)NET CASH FLOW FROM OPERATING ACTIVITIES
    
    $
    4,726
    
    
    $
    5,129CASH FLOWS FROM INVESTING ACTIVITIESPurchases of available-for-sale securities
    
    
    (5,114
    )
    
    
    (4,970
    )Proceeds from maturities of securities
    
    
    13,722
    
    
    
    21,683Proceeds from sales of available-for-sale securities
    
    
    
    
    
    
    1,326Net decrease (increase) in loans
    
    
    11,432
    
    
    
    (2,724
    )Additions to premises and equipment
    
    
    (635
    )
    
    
    (798
    )Net cash from investing activities
    
    
    19,405
    
    
    
    14,517CASH FLOWS FROM FINANCING ACTIVITIESNet change in deposits
    
    
    (14,533
    )
    
    
    (1,997
    )Net change in federal funds purchased and securities sold
under repurchase agreements
    
    
    (3,729
    )
    
    
    (3,975
    )Net change in borrowed funds
    
    
    (2,900
    )
    
    
    (11,250
    )Proceeds from issuance of treasury shares
    
    
    29
    
    
    
    45Cash dividends paid
    
    
    (1,631
    )
    
    
    (1,627
    )Purchase of treasury stock
    
    
    (1,199
    )
    
    
    (1,729
    )Payment of deferred compensation
    
    
    (11
    )
    
    
    (73
    )Net cash from financing activities
    
    
    (23,974
    )
    
    
    (20,606
    )NET CHANGE IN CASH AND CASH EQUIVALENTS
    
    
    157
    
    
    
    (960
    )CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
    
    
    11,843
    
    
    
    12,338CASH AND CASH EQUIVALENTS AT END OF PERIOD
    
    $
    12,000
    
    
    $
    11,378SUPPLEMENTAL DISCLOSURESCash paid during the year for:Interest
    
    $
    8,646
    
    
    $
    6,511Federal income taxes
    
    $
    1,825
    
    
    $
    1,645Transfer of loans to other real estate owned
    
    $
    89
    
    
    $
    
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8




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ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
 "
       9




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10




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Nine months ended
    
    Nine months endedSeptember 30, 2007
    
    September 30, 2006(Dollars in thousands)Provision for loan losses charged to expense
    
    $
    
    
    
    $
    280Net loan charge-offs
    
    
    232
    
    
    
    273Annualized net loan charge-offs as a percent
of average outstanding loans
    
    
    .09
    %
    
    
    .11
    %
  September 30, 2007
    
    
    December 31, 2006(Dollars in thousands)Nonaccrual loans
    
    $
    3,545
    
    
    $
    3,795Loans contractually past due 90 days or more
and still accruing interest
    
    
    189
    
    
    
    716Restructured loans
    
    
    24
    
    
    
    Potential problem loans, other than those past due
90 days or more, nonaccrual, or restructured
    
    
    10,787
    
    
    
    8,199Total potential problem and non-performing loans
    
    $
    14,545
    
    
    $
    12,710Allowance for loan losses
    
    $
    3,368
    
    
    $
    3,600Allowance for loan losses as a percent
of period-end loans
    
    
    .97
    %
    
    
    1.01
    %
  11




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September 30,
    
    
    December 31,2007
    
    
    2006(Dollars in thousands)Potential problem loans not currently past due
    
    $
    6,270
    
    
    $
    5,260Potential problem loans past due one day or more but less than 10 days
    
    
    2,006
    
    
    
    843Potential problem loans past due 10 days or more but less than 30 days
    
    
    1,215
    
    
    
    745Potential problem loans past due 30 days or more but less than 60 days
    
    
    985
    
    
    
    1,175Potential problem loans past due 60 days or more but less than 90 days
    
    
    311
    
    
    
    176Total potential problem loans
    
    $
    10,787
    
    
    $
    8,199
  September 30,
    
    
    December 31,2007
    
    
    2006(Dollars in thousands)Collateralized by an interest in real property
    
    $
    6,790
    
    
    $
    6,679Collateralized by an interest in assets other than real property
    
    
    3,972
    
    
    
    1,500Unsecured
    
    
    25
    
    
    
    20Total potential problem loans
    
    $
    10,787
    
    
    $
    8,199
  12




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13




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ITEM 3.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  
    (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 were effective as of the end of the period
covered by this Quarterly Report on Form 10-Q.
   
  
   14




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(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 September 30, 2007:
 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)07/01/07
through 
07/31/07
    
    None
    
    None
    
    None
    
    
    60,11108/01/07
through 
08/31/07
    
    
    1,795
    
    
    $
    39.75
    
    
    
    1,795
    
    
    
    86,06909/01/07
through 
09/30/07
    
    None
    
    None
    
    None
    
    
    86,069
 
 (1)
    
    All share purchases were part of publicly announced programs and all were open-market
transactions.(2)
    
    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 a total
of 29,175 shares being purchased under such program prior to its expiration). A stock
buy-back program commencing August 1, 2007 and ending on February 1, 2008 was announced on
July 17, 2007 in which up to 87,864 shares may be repurchased (with 1,795 shares purchased on
August 16, 2007). 15




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16




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ExhibitNumber
    
    Description
    
    Location3.1
    
    Amended Articles of Incorporation of Croghan
Bancshares, Inc.
    
    Incorporated herein by
reference to Exhibit
3(i) to the Registrants
Quarterly Report on Form
10-Q for the quarterly
period ended June 30,
1997 (File No. 0-20159)3.2
    
    Amended Code of Regulations of Croghan Bancshares, Inc.
    
    Incorporated herein by
reference to Exhibit
3(ii) to the
Registrants Quarterly
Report on Form 10-Q for
the quarterly period
ended June 30, 2000
(File No. 0-20159)10.1
    
    Employment Agreement, dated as of August 29, 2007,
between The Croghan Colonial Bank and Steven C.
Futrell
    
    Incorporated herein by
reference to Exhibit
10.1 to the Registrants
Current Report on Form
8-K filed September 5,
2007 (File No. 0-20159)31.1
    
    Rule 13a-14(a)/15d-14(a) Certification  Principal
Executive Officer
    
    Included with this filing31.2
    
    Rule 13a-14(a)/15d-14(a) Certification  Principal
Financial Officer
    
    Included with this filing32
    
    Section 1350 Certification  Principal Executive
Officer and Principal Financial Officer
    
    Included with this filing
 17




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CROGHAN BANCSHARES, INC.RegistrantDate: October 26, 2007
    By:
    /s/  Steven C. FutrellSteven C. Futrell, President and CEO(Principal Executive Officer)Date: October 26, 2007
    By:
    /s/  Kendall W. RiemanKendall W. Rieman, Treasurer(Principal Financial Officer)


18




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ExhibitNumber
    
    Description
    
    Location3.1
    
    Amended Articles of Incorporation of Croghan
Bancshares, Inc.
    
    Incorporated herein by
reference to Exhibit
3(i) to the Registrants
Quarterly Report on Form
10-Q for the quarterly
period ended June 30,
1997 (File No. 0-20159)3.2
    
    Amended Code of Regulations of Croghan Bancshares, Inc.
    
    Incorporated herein by
reference to Exhibit
3(ii) to the
Registrants Quarterly
Report on Form 10-Q for
the quarterly period
ended June 30, 2000
(File No. 0-20159)10.1
    
    Employment Agreement, dated as of August 29, 2007,
between The Croghan Colonial Bank and Steven C.
Futrell
    
    Incorporated herein by
reference to Exhibit
10.1 to the Registrants
Current Report on Form
8-K filed September 5,
2007 (File No. 0-20159)31.1
    
    Rule 13a-14(a)/15d-14(a) Certification  Principal
Executive Officer
    
    Included with this filing31.2
    
    Rule 13a-14(a)/15d-14(a) Certification  Principal
Financial Officer
    
    Included with this filing32
    
    Section 1350 Certification  Principal Executive
Officer and Principal Financial Officer
    
    Included with this filing
 19