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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, 2008
 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
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ(Do not check if a smaller reporting company)
 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 - 13Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    13Item 4T.
    
    Controls and Procedures
    
    14PART II. OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    15Item 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
    
    16Signatures
    
    17EX-31.1 - Rule 13a-14(a)/15d-14(a) Certification - Principal Executive OfficerEX-31.2 - Rule 13a-14(a)/15d-14(a) Certification - Principal Financial OfficerEX-32 - Section 1350 Certification - Principal Executive Officer and Principal Financial Officer
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March 31
    
    
    December 312008
    
    
    2007(Dollars in thousands, except par value)ASSETSCASH AND CASH EQUIVALENTSCash and due from banks
    
    $
    9,899
    
    
    
    14,072Interest-bearing deposits in other banks
    
    
    746
    
    
    
    5,977Federal funds sold
    
    
    3,900
    
    
    
    5,300Total cash and cash equivalents
    
    
    14,545
    
    
    
    25,349SECURITIESAvailable-for-sale, at fair value
    
    
    64,114
    
    
    
    47,344Held-to-maturity, at amortized cost, fair value of $540 in 2008 and $534 in
2007
    
    
    505
    
    
    
    506Restricted stock
    
    
    3,629
    
    
    
    3,629Total securities
    
    
    68,248
    
    
    
    51,479LOANS
    
    
    342,705
    
    
    
    350,514Less: Allowance for loan losses
    
    
    3,061
    
    
    
    3,358Net loans
    
    
    339,644
    
    
    
    347,156Premises and equipment, net
    
    
    7,524
    
    
    
    7,653Cash surrender value of life insurance
    
    
    10,319
    
    
    
    10,227Goodwill
    
    
    10,430
    
    
    
    10,430Core deposit intangible asset, net
    
    
    274
    
    
    
    288Accrued interest receivable
    
    
    1,962
    
    
    
    1,916Other assets
    
    
    958
    
    
    
    630TOTAL ASSETS
    
    $
    453,904
    
    
    $
    455,128LIABILITIES AND STOCKHOLDERS EQUITYLIABILITIESDeposits:Demand, non-interest bearing
    
    $
    47,614
    
    
    $
    52,957Savings, NOW and Money Market deposits
    
    
    163,743
    
    
    
    160,431Time
    
    
    150,350
    
    
    
    149,445Total deposits
    
    
    361,707
    
    
    
    362,833Federal funds purchased and securities sold under repurchase agreements
    
    
    9,734
    
    
    
    11,106Borrowed funds
    
    
    24,500
    
    
    
    24,500Dividends payable
    
    
    559
    
    
    
    541Other liabilities
    
    
    3,572
    
    
    
    2,860Total liabilities
    
    
    400,072
    
    
    
    401,840STOCKHOLDERS EQUITYCommon stock, $12.50 par value. Authorized 6,000,000
shares; issued 1,914,109 shares
    
    
    23,926
    
    
    
    23,926Surplus
    
    
    179
    
    
    
    179Retained earnings
    
    
    35,396
    
    
    
    35,292Accumulated other comprehensive income
    
    
    597
    
    
    
    157Treasury stock, 168,691 shares at cost
    
    
    (6,266
    )
    
    
    (6,266
    )Total stockholders equity
    
    
    53,832
    
    
    
    53,288TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    453,904
    
    
    $
    455,128
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Three months endedMarch 312008
    
    
    2007(Dollars in thousands,except per share data)INTEREST INCOMELoans, including fees
    
    $
    5,876
    
    
    $
    6,227Securities:Obligations of U.S. Government agencies and corporations
    
    
    382
    
    
    
    364Obligations of states and political subdivisions
    
    
    190
    
    
    
    196Other
    
    
    60
    
    
    
    70Federal funds sold
    
    
    66
    
    
    
    44Total interest income
    
    
    6,574
    
    
    
    6,901INTEREST EXPENSEDeposits
    
    
    2,006
    
    
    
    2,361Other borrowings
    
    
    342
    
    
    
    352Total interest expense
    
    
    2,348
    
    
    
    2,713Net interest income
    
    
    4,226
    
    
    
    4,188PROVISION FOR LOAN LOSSES
    
    
    650
    
    
    
    Net interest income, after provision for loan losses
    
    
    3,576
    
    
    
    4,188NON-INTEREST INCOMETrust income
    
    
    210
    
    
    
    208Service charges on deposit accounts
    
    
    378
    
    
    
    325Other
    
    
    299
    
    
    
    227Total non-interest income
    
    
    887
    
    
    
    760NON-INTEREST EXPENSESSalaries, wages and employee benefits
    
    
    1,836
    
    
    
    1,812Occupancy of premises
    
    
    234
    
    
    
    209Amortization of core deposit intangible asset
    
    
    14
    
    
    
    15Other operating
    
    
    1,275
    
    
    
    1,138Total non-interest expenses
    
    
    3,359
    
    
    
    3,174Income before federal income taxes
    
    
    1,104
    
    
    
    1,774FEDERAL INCOME TAXES
    
    
    292
    
    
    
    521NET INCOME
    
    $
    812
    
    
    $
    1,253Net income per share, based on 1,745,418 shares in 2008 and 1,780,766 shares in 2007
    
    $
    0.47
    
    
    $
    0.70Dividends declared, based on 1,745,418 shares in 2008 and 1,773,986 shares in 2007
    
    $
    0.32
    
    
    $
    0.31
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Three months endedMarch 312008
    
    
    2007(Dollars in thousands,except per share data)BALANCE AT BEGINNING OF PERIOD
    
    $
    53,288
    
    
    $
    51,163Cumulative effect of change in accounting principle, net of tax
    
    
    (149
    )
    
    
    Comprehensive Income:Net income
    
    
    812
    
    
    
    1,253Change in net unrealized gain on securities available-for-sale,
net of reclassification adjustments and related income taxes
    
    
    440
    
    
    
    86Total comprehensive income
    
    
    1,252
    
    
    
    1,339Proceeds from sale of 510 treasury shares in 2007
    
    
    
    
    
    
    19Purchase of 12,230 treasury shares in 2007
    
    
    
    
    
    
    (451
    )Cash dividends declared, $.32 per share in 2008 and $.31 per share in 2007
    
    
    (559
    )
    
    
    (550
    )BALANCE AT END OF PERIOD
    
    $
    53,832
    
    
    $
    51,520
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Three months endedMarch 312008
    
    
    2007(Dollars in thousands)NET CASH FLOW FROM OPERATING ACTIVITIES
    
    $
    1,657
    
    
    $
    1,845CASH FLOWS FROM INVESTING ACTIVITIESProceeds from maturities of securities
    
    
    3,762
    
    
    
    3,816Purchases of available-for-sale securities
    
    
    (19,873
    )
    
    
    Net decrease in loans
    
    
    6,830
    
    
    
    7,221Additions to premises and equipment
    
    
    (130
    )
    
    
    (431
    )Net cash from investing activities
    
    
    (9,411
    )
    
    
    10,606CASH FLOWS FROM FINANCING ACTIVITIESNet change in deposits
    
    
    (1,126
    )
    
    
    (4,165
    )Net change in federal funds purchased and
securities sold under repurchase
agreements
    
    
    (1,372
    )
    
    
    (2,403
    )Net change in borrowed funds
    
    
    
    
    
    
    (400
    )Proceeds from issuance of treasury shares
    
    
    
    
    
    
    19Cash dividends paid
    
    
    (541
    )
    
    
    (536
    )Purchase of treasury stock
    
    
    
    
    
    
    (451
    )Payment of deferred compensation
    
    
    (11
    )
    
    
    (11
    )Net cash from financing activities
    
    
    (3,050
    )
    
    
    (7,947
    )NET CHANGE IN CASH AND CASH EQUIVALENTS
    
    
    (10,804
    )
    
    
    4,504CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
    
    
    25,349
    
    
    
    11,843CASH AND CASH EQUIVALENTS AT END OF PERIOD
    
    $
    14,545
    
    
    $
    16,347SUPPLEMENTAL DISCLOSURESCash paid during the year for:Interest
    
    $
    2,172
    
    
    $
    2,412Federal income taxes
    
    $
    160
    
    
    $
    120
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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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Three months ended
    
    
    Three months endedMarch 31, 2008
    
    
    March 31, 2007(Dollars in thousands)Provision for loan losses charged to expense
    
    

$650
    
    
    

$Net loan charge-offs
    
    
    947
    
    
    
    76Annualized net loan charge-offs as a percent
of average outstanding loans
    
    
    .28%
    
    
    
    .09%
  March 31, 2008
    
    
    December 31, 2007(Dollars in thousands)Nonaccrual loans
    
    $

1,296
    
    
    $

2,285Loans contractually past due 90 days or more
and still accruing interest
    
    
    94
    
    
    
    237Restructured loans
    
    
    
    
    
    
    Potential problem loans, other than those past due
90 days or more, nonaccrual, or restructured
    
    
    11,440
    
    
    
    9,405Total potential problem and non-performing loans
    
    $

12,830
    
    
    $

11,927Allowance for loan losses
    
    $

3,061
    
    
    $

3,358Allowance for loan losses as a percent
of period-end loans
    
    
    .89
    %
    
    
    .96
    %
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March 31,
    
    
    December 31,2008
    
    
    2007(Dollars in thousands)Potential problem loans not currently past due
    
    $
    7,594
    
    
    $
    4,888Potential problem loans past due one day or more but less than 10 days
    
    
    1,801
    
    
    
    2,006Potential problem loans past due 10 days or more but less than 30 days
    
    
    1,455
    
    
    
    1,215Potential problem loans past due 30 days or more but less than 60 days
    
    
    307
    
    
    
    985Potential problem loans past due 60 days or more but less than 90 days
    
    
    283
    
    
    
    311Total potential problem loans
    
    $
    11,440
    
    
    $
    9,405
  March 31,
    
    
    December 31,2008
    
    
    2007(Dollars in thousands)Collateralized by an interest in real property
    
    $
    9,729
    
    
    $
    6,790Collateralized by an interest in assets other than real property
    
    
    1,698
    
    
    
    2,590Unsecured
    
    
    13
    
    
    
    25Total potential problem loans
    
    $
    11,440
    
    
    $
    9,405
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13




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(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.
   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 March 31, 2008:
 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)01/01/08
through
    
    None
    
    None
    
    None
    
    
    75,98801/31/0802/01/08
through
    
    None
    
    None
    
    None
    
    
    87,27002/29/0803/01/08
through
    
    None
    
    None
    
    None
    
    
    87,27003/31/08
 
 (1)
    
    A stock buy-back program was approved on July 17, 2007 pursuant to which up to 89,286 common
shares of Croghan could be repurchased from August 1, 2007 through February 1, 2008 (with a
total of 11,876 shares being repurchased prior to its expiration). A stock buyback program
was announced on January 25, 2008 pursuant to which up to 87,270 common shares of Croghan may
be repurchased from February 1, 2008 through August 1, 2008. 15




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CROGHAN BANCSHARES, INC.
               RegistrantDate:  April 28, 2008
    By:
    /s/  Steven C. FutrellSteven C. Futrell, President and CEO(Principal Executive Officer)Date:  April 28, 2008
    By:
    /s/  Kendall W. RiemanKendall W. Rieman, Treasurer(Principal Financial Officer) 17




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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
 18