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F&M Doesn’t Need Government Money

F&M Doesn’t Need Government Money

Farmers & Merchants State Bank is well-capitalized and does not need government bailout funds.

That’s what the Farmers & Merchants Bancorp, Inc., holding company for F&M, told the Archbold Buckeye, Friday, Nov. 7.

The board of directors and management said it has determined not to participate in the treasury department Capital Purchase Program (CPP), which is part of the broader Troubled Asset Relief Program (TARP) initiative.

"Farmers & Merchants is well capitalized now, and for the foreseeable future. F&M has the liquidity to continue in business," a bank spokesperson said.

F&M believes it is already well-positioned to meet CPP objectives.

CPP Explained


Paul Siebenmorgen, president and chief executive officer of the bank, told the Archbold Buckeye their decision is akin to deciding not to take medicine for a disease the bank does not have.

Under the CPP, Siebenmorgen said the U.S. Treasury Department will purchase 1% to 3% of preferred stock in a bank. The bank then repays the treasury a set interest rate, so the taxpayers earn some profit.

"Essentially, the government is taking a position in the bank," he said.

CPP "puts more capital in the bank, capital to make loans, to solve the credit crisis," he said.

"But we don’t really have a credit crisis locally," he said.

"We are well-capitalized. Of the 24 largest banks in Ohio, we have the most capital," he said.

"Getting more money as capital didn’t make a lot of sense to us," he said.

Weak Banks

To participate in CPP, banks need to apply. Some banks do not qualify for CPP funds. Some investors assume that if a bank does not apply, it’s too weak to qualify.

That’s not the case with F&M.

"We don’t need it," he said.

F&M made the announcement so people in the financial world will know why the bank is not seeking the government bailout money.

The CPP program debuted Tuesday, Oct. 14. Banks were given 30 days to apply.

Siebenmorgen said the Nov. 14 deadline is just around the corner.

"We’ve been contemplating this since Oct. 14," he said.- David Pugh

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