##### Table of Contents



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)
 
     Large accelerated filer [  ]
    Accelerated filer [  ]
    Non-accelerated filer [  ]
    Smaller reporting company [X](Do not check if a smaller reporting company)




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##### 



PART I. FINANCIAL INFORMATION
    
    Page(s)Item 1.   Financial Statements
    
    
    3 - 12Item 2.   Managements Discussion and Analysis of Financial Condition and Results of
Operations
    
    
    12 - 17Item 3.   Quantitative and Qualitative Disclosures About Market Risk
    
    
    17Item 4.   Controls and Procedures
    
    
    18PART II. OTHER INFORMATIONItem 1.   Legal Proceedings
    
    
    19Item 1A. Risk Factors
    
    
    19Item 2.   Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    20Item 3.   Defaults Upon Senior Securities
    
    
    21Item 4.   [Reserved]
    
    
    21Item 5.   Other Information
    
    
    21Item 6.   Exhibits
    
    
    21Signatures
    
    
    22EX-31.1EX-31.2EX-32
  2




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##### Table of Contents



September 30
    
    
    December 31ASSETS
    
    2010
    
    
    2009(Dollars in thousands, except par value)CASH AND CASH EQUIVALENTSCash and due from banks
    
    $
    11,334
    
    
    $
    15,928Interest-bearing deposits in other banks
    
    
    20,792
    
    
    
    796Total cash and cash equivalents
    
    
    32,126
    
    
    
    16,724SECURITIESAvailable-for-sale, at fair value
    
    
    129,739
    
    
    
    105,792Held-to-maturity, at amortized cost, fair value of $512 in 2010 and $526 in 2009
    
    
    501
    
    
    
    502Restricted stock
    
    
    3,844
    
    
    
    3,844Total securities
    
    
    134,084
    
    
    
    110,138LOANS
    
    
    302,986
    
    
    
    324,484Less: Allowance for loan losses
    
    
    5,164
    
    
    
    4,433Net loans
    
    
    297,822
    
    
    
    320,051Premises and equipment, net
    
    
    6,729
    
    
    
    6,863Cash surrender value of life insurance
    
    
    11,216
    
    
    
    10,946Goodwill
    
    
    10,430
    
    
    
    10,430Core deposit intangible asset, net
    
    
    130
    
    
    
    173Accrued interest receivable
    
    
    2,150
    
    
    
    1,857Other real estate owned
    
    
    2,178
    
    
    
    2,330Other assets
    
    
    2,594
    
    
    
    2,476TOTAL ASSETS
    
    $
    499,459
    
    
    $
    481,988LIABILITIES AND STOCKHOLDERS EQUITYLIABILITIESDeposits:Demand, non-interest bearing
    
    $
    59,529
    
    
    $
    60,072Savings, NOW, and Money Market deposits
    
    
    181,571
    
    
    
    159,316Time
    
    
    138,641
    
    
    
    151,331Total deposits
    
    
    379,741
    
    
    
    370,719Federal funds purchased and securities sold under repurchase agreements
    
    
    23,192
    
    
    
    16,375Federal Home Loan Bank borrowings
    
    
    35,500
    
    
    
    35,500Dividends payable
    
    
    538
    
    
    
    549Other liabilities
    
    
    2,447
    
    
    
    2,718Total liabilities
    
    
    441,418
    
    
    
    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
    
    
    39,554
    
    
    
    38,187Accumulated other comprehensive income
    
    
    2,404
    
    
    
    1,044Treasury stock, 232,729 shares in 2010 and 200,232 shares in 2009, at cost
    
    
    (8,022
    )
    
    
    (7,209
    )Total stockholders equity
    
    
    58,041
    
    
    
    56,127TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    499,459
    
    
    $
    481,988
  3




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Three months endedSeptember 302010
    
    
    2009(Dollars in thousands,except per share data)INTEREST INCOMELoans, including fees
    
    $
    4,549
    
    
    $
    4,996Securities:Obligations of U.S. Government agencies and corporations
    
    
    668
    
    
    
    601Obligations of states and political subdivisions
    
    
    444
    
    
    
    293Other
    
    
    56
    
    
    
    59Interest on deposits in other banks
    
    
    5
    
    
    
    5Total interest income
    
    
    5,722
    
    
    
    5,954INTEREST EXPENSEDeposits
    
    
    922
    
    
    
    1,207Other borrowings
    
    
    349
    
    
    
    351Total interest expense
    
    
    1,271
    
    
    
    1,558Net interest income
    
    
    4,451
    
    
    
    4,396PROVISION FOR LOAN LOSSES
    
    
    150
    
    
    
    1,250Net interest income, after provision for loan losses
    
    
    4,301
    
    
    
    3,146NON-INTEREST INCOMEGain on sale of loans
    
    
    87
    
    
    
    35Gain on sale of securities
    
    
    3
    
    
    
    -Trust income
    
    
    268
    
    
    
    226Service charges on deposit accounts
    
    
    374
    
    
    
    394Other
    
    
    260
    
    
    
    189Total non-interest income
    
    
    992
    
    
    
    844NON-INTEREST EXPENSESSalaries, wages, and employee benefits
    
    
    2,128
    
    
    
    1,867Occupancy of premises
    
    
    200
    
    
    
    203Amortization of core deposit intangible asset
    
    
    15
    
    
    
    15Other operating
    
    
    1,423
    
    
    
    1,499Total non-interest expenses
    
    
    3,766
    
    
    
    3,584Income before federal income taxes
    
    
    1,527
    
    
    
    406FEDERAL INCOME TAXES
    
    
    310
    
    
    
    35NET INCOME
    
    $
    1,217
    
    
    $
    371Net income per share, based on 1,685,535 shares in 2010 and 1,720,330 shares in 2009
    
    $
    0.72
    
    
    $
    0.22Dividends declared per share
    
    $
    0.32
    
    
    $
    0.32
  4




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Nine months endedSeptember 302010
    
    
    2009(Dollars in thousands,except per share data)INTEREST INCOMELoans, including fees
    
    $
    13,763
    
    
    $
    15,405Securities:Obligations of U.S. Government agencies and corporations
    
    
    2,023
    
    
    
    1,652Obligations of states and political subdivisions
    
    
    1,212
    
    
    
    736Other
    
    
    165
    
    
    
    167Interest on deposits in other banks
    
    
    16
    
    
    
    21Total interest income
    
    
    17,179
    
    
    
    17,981INTEREST EXPENSEDeposits
    
    
    2,873
    
    
    
    3,725Other borrowings
    
    
    1,035
    
    
    
    1,080Total interest expense
    
    
    3,908
    
    
    
    4,805Net interest income
    
    
    13,271
    
    
    
    13,176PROVISION FOR LOAN LOSSES
    
    
    1,250
    
    
    
    2,350Net interest income, after provision for loan losses
    
    
    12,021
    
    
    
    10,826NON-INTEREST INCOMEGain on sale of loans
    
    
    170
    
    
    
    269Gain on sale of securities
    
    
    11
    
    
    
    -Trust income
    
    
    783
    
    
    
    676Service charges on deposit accounts
    
    
    1,067
    
    
    
    1,105Other
    
    
    700
    
    
    
    676Total non-interest income
    
    
    2,731
    
    
    
    2,726NON-INTEREST EXPENSESSalaries, wages, and employee benefits
    
    
    6,111
    
    
    
    5,724Occupancy of premises
    
    
    624
    
    
    
    634Amortization of core deposit intangible asset
    
    
    43
    
    
    
    43Other operating
    
    
    4,186
    
    
    
    4,392Total non-interest expenses
    
    
    10,964
    
    
    
    10,793Income before federal income taxes
    
    
    3,788
    
    
    
    2,759FEDERAL INCOME TAXES
    
    
    796
    
    
    
    644NET INCOME
    
    $
    2,992
    
    
    $
    2,115Net income per share, based on 1,696,795 shares in 2010 and 1,720,438 shares in 2009
    
    $
    1.76
    
    
    $
    1.23Dividends declared per share
    
    $
    0.96
    
    
    $
    0.96
  5




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Three months endedSeptember 302010
    
    
    2009(Dollars in thousands,except per share data)BALANCE AT BEGINNING OF PERIOD
    
    $
    56,852
    
    
    $
    55,689Comprehensive Income:Net income
    
    
    1,217
    
    
    
    371Change in net unrealized gain on securities available-for-sale,
net of reclassification adjustments and related income taxes
    
    
    787
    
    
    
    1,160Total comprehensive income
    
    
    2,004
    
    
    
    1,531Purchase of treasury shares, 10,921 in 2010 and none in 2009
    
    
    (277
    )
    
    
    -Cash dividends declared, $.32 per share in 2010 and 2009
    
    
    (538
    )
    
    
    (550
    )BALANCE AT END OF PERIOD
    
    $
    58,041
    
    
    $
    56,670Nine months endedSeptember 302010
    
    
    2009(Dollars in thousands,except per share data)BALANCE AT BEGINNING OF PERIOD
    
    $
    56,127
    
    
    $
    54,819Comprehensive Income:Net income
    
    
    2,992
    
    
    
    2,115Change in net unrealized gain on securities available-for-sale,
net of reclassification adjustments and related income taxes
    
    
    1,360
    
    
    
    1,401Total comprehensive income
    
    
    4,352
    
    
    
    3,516Purchase of treasury shares, 32,497 shares in 2010 and 528 shares in 2009
    
    
    (813
    )
    
    
    (13
    )Cash dividends declared, $.96 per share in 2010 and 2009
    
    
    (1,625
    )
    
    
    (1,652
    )BALANCE AT END OF PERIOD
    
    $
    58,041
    
    
    $
    56,670
  6




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Nine months endedSeptember 302010
    
    
    2009(Dollars in thousands)NET CASH FLOW FROM OPERATING ACTIVITIES
    
    $
    4,932
    
    
    $
    4,664CASH FLOWS FROM INVESTING ACTIVITIESProceeds from maturities of available-for-sale securities
    
    
    16,577
    
    
    
    17,000Proceeds from sale of available-for-sale securities
    
    
    1,996
    
    
    
    -Purchases of available-for-sale securities
    
    
    (41,215
    )
    
    
    (37,237
    )Net decrease in loans
    
    
    20,240
    
    
    
    18,139Additions to premises and equipment
    
    
    (447
    )
    
    
    (631
    )Proceeds from sale of property
    
    
    -
    
    
    
    66Net cash from investing activities
    
    
    (2,849
    )
    
    
    (2,663
    )CASH FLOWS FROM FINANCING ACTIVITIESNet change in deposits
    
    
    9,022
    
    
    
    8,740Net change in federal funds purchased and securities sold under repurchase agreements
    
    
    6,817
    
    
    
    (2,917
    )Net change in borrowed funds
    
    
    -
    
    
    
    (2,000
    )Cash dividends paid
    
    
    (1,635
    )
    
    
    (1,653
    )Purchase of treasury stock
    
    
    (813
    )
    
    
    (13
    )Payment of deferred compensation
    
    
    (72
    )
    
    
    (498
    )Net cash from financing activities
    
    
    13,319
    
    
    
    1,659NET CHANGE IN CASH AND CASH EQUIVALENTS
    
    
    15,402
    
    
    
    3,660CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
    
    
    16,724
    
    
    
    10,132CASH AND CASH EQUIVALENTS AT END OF PERIOD
    
    $
    32,126
    
    
    $
    13,792SUPPLEMENTAL DISCLOSURESCash paid during the year for:Interest
    
    $
    5,097
    
    
    $
    5,474Federal income taxes
    
    $
    1,311
    
    
    $
    915NON-CASH OPERATING ACTIVITY:Change in deferred income taxes on net unrealized gain onavailable-for-sale securities
    
    $
    (700
    )
    
    $
    (722
    )NON-CASH INVESTING ACTIVITY:Change in net unrealized gain on available-for-sale securities
    
    $
    2,060
    
    
    $
    2,123NON-CASH OPERATING AND INVESTING ACTIVITY:Transfer of loans to other real estate owned
    
    $
    739
    
    
    $
    227
  7




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CROGHAN BANCSHARES, INC.
Notes to Consolidated Financial Statements
September 30, 2010
(Unaudited)
 NOTE 1  CONSOLIDATED FINANCIAL STATEMENTS
    NOTE 2  NEW ACCOUNTING PRONOUCEMENTS
  8




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Fair Value Measurements
and Disclosures
 , Disclosure about the Credit
Quality of Financing Receivables and the Allowance for Credt Losses
 NOTE 3  FAIR VALUE OF FINANCIAL INSTRUMENTS
  September 30, 2010
    
    
    December 31, 2009Carrying
    Estimated fair
    
    Carrying
    Estimated fairamount
    
    value
    
    amount
    
    value(Dollars in thousands)FINANCIAL ASSETSCash and cash equivalents
    
    $
    32,126
    
    
    $
    32,126
    
    
    $
    16,724
    
    
    $
    16,724Securities
    
    
    134,084
    
    
    
    134,095
    
    
    
    110,138
    
    
    
    110,162Loans, net
    
    
    297,822
    
    
    
    302,262
    
    
    
    320,051
    
    
    
    320,047Total
    
    $
    464,032
    
    
    $
    468,483
    
    
    $
    446,913
    
    
    $
    446,933FINANCIAL LIABILITIESDeposits
    
    $
    379,741
    
    
    $
    381,991
    
    
    $
    370,719
    
    
    $
    372,312Federal funds purchased and
securities sold under 
repurchase agreements
    
    
    23,192
    
    
    
    23,192
    
    
    
    16,375
    
    
    
    16,327Federal Home Loan Bank 
borrowings
    
    
    35,500
    
    
    
    36,397
    
    
    
    35,500
    
    
    
    37,108Total
    
    $
    438,433
    
    
    $
    441,580
    
    
    $
    422,594
    
    
    $
    425,747
 9




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Cash and cash equivalents:
  Securities:
  Loans:
  Deposit liabilities:
  Other financial instruments:
   10




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NOTE 4  SECURITIES
  September 30, 2010
    
    
    December 31, 2009Amortized
    
    
    Fair
    
    
    Amortized
    
    
    Faircost
    
    
    value
    
    
    cost
    
    
    valueObligations of U.S. Government
agencies and corporations
    
    
    $74,045
    
    
    
    $75,331
    
    
    
    $65,927
    
    
    
    $66,729Obligations of states and 
political subdivisions
    
    
    51,702
    
    
    
    54,058
    
    
    
    37,933
    
    
    
    38,713Other
    
    
    350
    
    
    
    350
    
    
    
    350
    
    
    
    350Total available-for-sale
    
    
    126,097
    
    
    
    129,739
    
    
    
    104,210
    
    
    
    105,792Held-to-maturity - corporate 
debt obligation
    
    
    501
    
    
    
    512
    
    
    
    502
    
    
    
    526Restricted stock
    
    
    3,844
    
    
    
    3,844
    
    
    
    3,844
    
    
    
    3,844Total
    
    $
    130,442
    
    
    $
    134,095
    
    
    $
    108,556
    
    
    $
    110,162
  September 30, 2010
    
    
    December 31, 2009Gross
    
    Gross
    
    Gross
    
    Grossunrealized gains
    
    unrealized losses
    
    unrealized gains
    
    unrealized lossesObligations of U.S. Government 
agencies and corporations
    
    
    $    1,586
    
    
    
    $    299
    
    
    
    $  1,153
    
    
    $
    351Obligations of states and 
political subdivisions
    
    
    2,362
    
    
    
    7
    
    
    
    871
    
    
    
    91Total available-for-sale
    
    
    3,948
    
    
    
    306
    
    
    
    2,024
    
    
    
    442Held-to-maturity - corporate 
debt obligation
    
    
    11
    
    
    
    -
    
    
    
    24
    
    
    
    -Total
    
    
    $    3,959
    
    
    
    $     306
    
    
    
    $  2,048
    
    
    $
    442
 11




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NOTE 5  OTHER COMPREHENSIVE INCOME
  2010
    
    
    2009Unrealized gains on available-for-sale securities
    
    $
    3,642
    
    
    $
    2,836Tax effect
    
    
    1,238
    
    
    
    964Net-of-tax amount
    
    $
    2,404
    
    
    $
    1,872
 
 ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
 
  PERFORMANCE SUMMARY
  12




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FINANCIAL POSITION
         13




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NET INTEREST INCOME
  PROVISION FOR LOAN LOSSES AND THE ALLOWANCE FOR LOAN LOSSES
   Nine months ended
    
    Nine months endedSeptember 30, 2010
    
    September 30, 2009(Dollars in thousands)Provision for loan losses charged to expense
    
    $
    1,250
    
    
    $
    2,350Net loan charge-offs
    
    
    519
    
    
    
    1,001Annualized net loan charge-offs as a percent 
of average outstanding loans
    
    
    .23%
    
    
    
    .40%
  September 30, 2010
    
    December 31, 2009(Dollars in thousands)Nonaccrual loans
    
    
    $  3,593
    
    
    
    $  5,903Loans contractually past due 90 days or more
and still accruing interest
    
    
    685
    
    
    
    45Restructured loans
    
    
    5,656
    
    
    
    3,191Potential problem loans, other than those past due 
90 days or more, nonaccrual, or restructured
    
    
    24,812
    
    
    
    22,227Total potential problem and non-performing loans
    
    
    $34,746
    
    
    
    $31,366Allowance for loan losses
    
    
    $  5,164
    
    
    
    $  4,433Allowance for loan losses as a percent 
of period-end loans
    
    
    1.70%
    
    
    
    1.37%
 14




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September 30,
    
    December 31,2010
    
    2009(Dollars in thousands)Potential problem loans not currently past due
    
    
    $20,004
    
    
    
    $16,453Potential problem loans past due one day or more but less than 10 days
    
    
    2,162
    
    
    
    186Potential problem loans past due 10 days or more but less than 30 days
    
    
    1,863
    
    
    
    4,833Potential problem loans past due 30 days or more but less than 60 days
    
    
    472
    
    
    
    528Potential problem loans past due 60 days or more but less than 90 days
    
    
    311
    
    
    
    227Total potential problem loans
    
    
    $24,812
    
    
    
    $22,227
  15




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September 30,
    
    December 31,2010
    
    2009(Dollars in thousands)Collateralized by an interest in real property
    
    
    $24,163
    
    
    
    $21,622Collateralized by an interest in assets other than real property
    
    
    643
    
    
    
    600Unsecured
    
    
    6
    
    
    
    5Total potential problem loans
    
    
    $24,812
    
    
    
    $22,227
  NON-INTEREST INCOME
  NON-INTEREST EXPENSES
   16




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FEDERAL INCOME TAX EXPENSE
  LIQUIDITY AND CAPITAL RESOURCES
     
   17




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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




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19




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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, 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)07/01/10
  through 
07/31/10
    
    None
    
    None
    
    None
    
    64,11708/01/10
  through 
08/31/10
    
    10,921
    
    25.40
    
    10,921
    
    73,69409/01/10
  through 
09/30/10
    
    None
    
    None
    
    None
    
    73,694
 
 (1)
    
    An extension of Croghans stock repurchase program commencing February 1, 2010 and
ending August 1, 2010 was announced on January 28, 2010, which authorized up to 85,693
shares to be repurchased (with 10,759 shares purchased in the first quarter of 2010 and
10,817 shares purchased in the second quarter of 2010). Another extension of Croghans
stock repurchase program was approved on July 13, 2010, authorizing up to 84,615 shares to
be repurchased from August 1, 2010 to February 1, 2011, with 10,921 shares purchased on
August 5, 2010. 20




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ExhibitNumber
    
    Description and Exhibit Location31.1
    
    Rule 13a-14(a)/15d-14(a) Certification  Principal Executive
Officer (included with this filing)31.2
    
    Rule 13a-14(a)/15d-14(a) Certification  Principal Financial
Officer (included with this filing)32
    
    Section 1350 Certification  Principal Executive Officer and
Principal Financial Officer (included with this filing)
 21




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CROGHAN BANCSHARES, INC.RegistrantDate:          October 27, 2010
    By:
    /s/  Rick M. RobertsonRick M. Robertson, President and CEO (Principal Executive Officer)Date:          October 27, 2010
    By:
    /s/  Kendall W. RiemanKendall W. Rieman, Treasurer (Principal Financial Officer) 22




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##### Table of Contents



ExhibitNumber
    
    Description
    
    Location31.1
    
    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
 23