Farmers & Merchants Bancorp Q3 profit rises to $25.1M

Q: How much net income did FMCB report in the third quarter of 2026?

FMCB reported net income of $25.082 million for the three months ended September 30, 2026, compared with $23.718 million for the same period in 2025.

Q: What was FMCB's net income for the first nine months of 2026?

FMCB reported net income of $73.885 million for the nine months ended September 30, 2026, compared with $69.782 million for the same period in 2025.

Higher net income and operating cash flow accompanied lower pretax and non-interest income and a quarterly comprehensive loss.

Available on EDGAR 11/06/2026 - 04:31 PM EST Accepted by SEC EDGAR 11/06/2026 - 04:30 PM EST

Filing Impact

(Moderate)

Filing Sentiment

(Neutral)How Sentiment works

Sentiment and the balance of points

Rhea-AI Sentiment reads the wording of the document, how positive or negative its language is on a 1 to 5 scale. The balance of points shown with the takes weighs what the document actually discloses, so the two can disagree, for example when a trial that missed its main goal is described in upbeat language.

How Sentiment works How the balance works

Form Type

10-Q

Rhea-AI Filing Summary

Farmers & Merchants Bancorp reported third-quarter net income of $25.082 million, versus $23.718 million a year earlier. Net interest income was $58.324 million versus $55.417 million; non-interest income was $6.251 million versus $6.867 million. Income before taxes was $27.241 million, compared with $32.636 million, while income tax expense was $2.159 million versus $8.918 million. For the first nine months, net income was $73.885 million versus $69.782 million; net interest income was $172.577 million versus $162.426 million, and operating cash flow was $114.141 million versus $90.081 million.

At September 30, 2026, total assets were $5.699055 billion, deposits were $4.970017 billion and net loans held for investment were $3.667022 billion. Other comprehensive loss, net of tax, was $33.035 million for the quarter and $40.991 million for nine months, versus income of $6.140 million and $12.424 million in 2025; unrealized available-for-sale securities losses were $46.912 million and $58.181 million in those periods. Cash dividends declared were $16.05 per share for the first nine months, compared with $14.30 per share in 2025.

4 points · 0 major

How this balance works

Rhea-AI gives every point it takes from this document a weight. Minor counts 1, Moderate 3 and Major 9, so one Major point outweighs several Minor ones. The bar adds up the weights on each side, and when neither side holds more than 65% of the total the balance reads Mixed.

It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.

Rhea-AI Sentiment measures something else, the tone of the wording.

How the balance works How Sentiment works

0 major · 2 points

How the balance works

Positive

Moderate pointThird-quarter net income increased to $25.082 million from $23.718 million.
Moderate pointNine-month net interest income increased to $172.577 million from $162.426 million.
Moderate pointNine-month operating cash flow increased to $114.141 million from $90.081 million.
Minor pointNine-month cash dividends declared per share rose to $16.05 from $14.30.

Negative

Moderate pointThird-quarter pretax income declined to $27.241 million from $32.636 million.
Minor pointThird-quarter non-interest income declined to $6.251 million from $6.867 million.

Filing Explained

Restricted-stock issuance was accompanied by tax withholding and treasury-stock purchases, so the award count alone does not show the net change in outstanding shares.

Form 10-Q is the unaudited quarterly report; Farmers & Merchants Bancorp reports payment defaults on two loans modified within the prior 12 months, and one commercial-and-industrial loan was deemed partially uncollectible and partly charged off.

The other default involved a $688,000 commercial real-estate loan more than 89 days past due; the commercial-and-industrial loan had an amortized cost basis of $1.1 million and was 60–89 days past due.

The equity statement records 15,289 restricted shares issued and 4,002 surrendered for tax withholding during the quarter, along with purchases of 4,714 treasury shares; common shares outstanding were 698,517 at September 30 and 697,388 at October 31. Issuing shares increases the total share count and reduces an existing holder’s percentage ownership absent offsetting changes; because the filing also records withholding and treasury-stock purchases, the award count alone does not describe the net change in outstanding shares.

Key Figures

Third-quarter net income: $25.082 million Third-quarter net interest income: $58.324 million Income before income taxes: $27.241 million +5 more

8 metrics

Third-quarter net income $25.082 million Three months ended September 30, 2026; $23.718 million in 2025

Third-quarter net interest income $58.324 million Three months ended September 30, 2026; $55.417 million in 2025

Income before income taxes $27.241 million Three months ended September 30, 2026; $32.636 million in 2025

Non-interest income $6.251 million Three months ended September 30, 2026; $6.867 million in 2025

Nine-month net income $73.885 million Nine months ended September 30, 2026; $69.782 million in 2025

Total assets $5.699055 billion At September 30, 2026

Other comprehensive loss, net of tax $33.035 million Three months ended September 30, 2026

Net cash provided by operating activities $114.141 million Nine months ended September 30, 2026; $90.081 million in 2025

Key Terms

allowance for credit losses, available-for-sale securities, held-to-maturity securities, non-accrual

4 terms

allowance for credit losses financial

"Allowance for credit losses - loans and leases"

Allowance for credit losses is a reserve set aside by a financial institution to cover potential losses from borrowers who may not repay their loans. It acts like a safety net, helping the institution prepare for loans that might turn sour. For investors, it signals how cautious the institution is about the quality of its loans and potential risks to its financial health.

available-for-sale securities financial

"securities available-for-sale"

Available-for-sale securities are investments in stocks, bonds or similar instruments that a company does not intend to trade frequently but may sell before they mature. They matter to investors because changes in the market value of these holdings show up as paper gains or losses on the company's balance sheet rather than immediately in profit, so they can affect reported net worth and the timing of income without changing day-to-day earnings. Think of them like items on a household shelf you might sell later: their value moves with the market even if you haven’t cashed out.

held-to-maturity securities financial

"securities held-to-maturity"

Held-to-maturity securities are debt investments—like bonds—that a company or investor intends and is able to keep until they mature and repay their face value. Think of them as money you lock in like a fixed-term certificate: they matter to investors because their value is recorded at amortized cost rather than market price, so they provide predictable interest income and reduce balance-sheet volatility but limit flexibility to sell.

non-accrual financial

"Total Past Due and Nonaccrual"

A non-accrual loan or asset is one for which a lender has stopped counting expected interest as income because the borrower is very late on payments or in serious financial trouble. For investors, non-accruals signal that future cash from interest is uncertain and that the lender may need to write down the loan’s value or set aside extra reserves, similar to a landlord who stops recording rent when a tenant stops paying.

FAQ

AI-generated questions and answers. How Rhea-AI works. Not financial advice.

How much net income did FMCB report in the third quarter of 2026?

FMCB reported net income of $25.082 million for the three months ended September 30, 2026, compared with $23.718 million for the same period in 2025.

What was FMCB's net income for the first nine months of 2026?

FMCB reported net income of $73.885 million for the nine months ended September 30, 2026, compared with $69.782 million for the same period in 2025.

What happened to FMCB loans modified for borrowers in financial difficulty?

During the nine months ended September 30, 2026, one commercial real estate loan with an amortized cost basis of $688,000 and one commercial and industrial loan with an amortized cost basis of $1.1 million experienced payment default after modification. The commercial and industrial loan was deemed partially uncollectible and resulted in a partial charge-off.

AI-generated analysis. How Rhea-AI works. Not financial advice.

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 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, 2026

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to__ _____

Commission File Number: 000-26099

FARMERS & MERCHANTS BANCORP

(Exact name of registrant as specified in its charter)

Delaware		94-3327828
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

111 W. Pine Street, Lodi, California		95240
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code (209) 367-2300

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
None	Not Applicable	Not Applicable

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐	Accelerated filer ☒
Non-accelerated filer ☐	Smaller reporting company ☐
Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

As of October 31, 2026, the registrant had 697,388 shares of common stock, $0.01 par value per share, outstanding.

FARMERS & MERCHANTS BANCORP

FORM 10-Q

TABLE OF CONTENTS

PART I. - FINANCIAL INFORMATION	Page

Item 1 - Consolidated Financial Statements (Unaudited)	3
Consolidated Balance Sheets	3
Consolidated Statements of Income	4
Consolidated Statements of Comprehensive Income	5
Consolidated Statements of Changes in Shareholders’ Equity	6
Consolidated Statements of Cash Flows	7
Notes to Consolidated Financial Statements	8

Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations	36

Item 3 - Quantitative and Qualitative Disclosures About Market Risk	59

Item 4 - Controls and Procedures	61

PART II. - OTHER INFORMATION

Item 1 – Legal Proceedings	61
Item 1A – Risk Factors	61
Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds	61
Item 3 – Defaults Upon Senior Securities	62
Item 4 – Mine Safety Disclosures	62
Item 5 – Other Information	62
Item 6 – Exhibits	62
Signatures	63

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1.

Consolidated Financial Statements (Unaudited)

FARMERS & MERCHANTS BANCORP

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(Dollars in thousands, except share and per share amounts)	September 30, 2026			December 31, 2025
ASSETS
Cash and due from banks	$	61,353		$	60,622
Interest-bearing deposits with banks		110,617			84,242
Total cash and cash equivalents		171,970			144,864
Securities available-for-sale, amortized cost $924,735 and $955,203, respectively		862,460			951,154
Securities held-to-maturity, fair value $527,361 and $592,736, respectively		684,307			718,641
Allowance for credit losses - securities held-to-maturity		(450	)		(450	)
Total investment securities		1,546,317			1,669,345
Non-marketable securities		15,549			15,549
Loans and leases held for investment, net of unearned income		3,744,343			3,648,945
Allowance for credit losses - loans and leases		(77,321	)		(76,375	)
Loans held for investment, net		3,667,022			3,572,570
Bank-owned life insurance		78,588			76,614
Premises and equipment, net		67,708			55,847
Deferred income tax assets and income taxes receivable		37,444			38,775
Accrued interest receivable		31,468			29,996
Goodwill		11,183			11,183
Other intangibles		801			1,165
Other assets		71,005			74,202
Total Assets	$	5,699,055		$	5,690,110

LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits:
Non-interest bearing	$	1,559,117		$	1,642,119
Interest-bearing:
Demand		788,195			802,352
Savings and money market		1,869,697			1,790,274
Certificates of deposit		753,008			743,081
Total interest-bearing		3,410,900			3,335,707
Total deposits		4,970,017			4,977,826
Subordinated debentures		10,310			10,310
Interest payable and other liabilities		55,625			56,460
Total Liabilities		5,035,952			5,044,596

COMMITMENTS AND CONTINGENCIES (Note 11)

SHAREHOLDERS’ EQUITY
Preferred shares, no par value, 1,000,000 shares authorized and none issued or outstanding		-			-
Common shares, $0.01 par value, 7,500,000 authorized, 734,127 and 728,560 issued and 698,517 and 697,904 outstanding at September 30, 2026 and December 31, 2025, respectively		7			7
Additional paid-in capital		14,245			11,550
Retained earnings		732,160			669,262
Accumulated other comprehensive loss, net of taxes		(44,503	)		(3,512	)
Treasury stock, at cost; 35,610 shares at September 30, 2026 and 30,656 shares at December 31, 2025		(38,806	)		(31,793	)
TOTAL SHAREHOLDERS’ EQUITY		663,103			645,514
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	5,699,055		$	5,690,110

See accompanying notes to the unaudited consolidated financial statements.

Table of Contents

FARMERS & MERCHANTS BANCORP

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

	Three Months Ended September 30,				Nine Months Ended September 30,
(Dollars in thousands, except share and per share amounts)	2026		2025		2026		2025
Interest income
Interest and fees on loans and leases	$	57,155	$	55,185	$	167,544	$	164,059
Interest and dividends on investment securities		15,269		12,343		45,939		33,841
Interest on deposits with others		1,207		3,064		4,336		9,891
Total interest income		73,631		70,592		217,819		207,791

Interest expense
Deposits		15,128		14,981		44,710		44,785
Subordinated debentures		179		194		532		580
Total interest expense		15,307		15,175		45,242		45,365
Net interest income		58,324		55,417		172,577		162,426
Provision for credit losses		1,500		700		2,500		2,400
Net interest income after provision for credit losses		56,824		54,717		170,077		160,026
Non-interest income
Card processing		1,891		1,780		5,513		5,236
Service charges on deposit accounts		870		779		2,482		2,295
Increase in cash surrender value of BOLI		673		639		1,973		1,869
Net gain on sale of securities available-for-sale		-		-		45		-
Net gain on deferred compensation benefits		-		1,200		-		2,797
Other		2,817		2,469		6,433		5,210
Total non-interest income		6,251		6,867		16,446		17,407
Non-interest expense
Salaries and employee benefits		25,798		18,912		65,451		54,488
Data processing		1,716		1,764		5,378		5,186
Occupancy		1,357		1,259		3,918		3,854
Deposit insurance		846		719		2,523		2,217
Professional services		2,553		786		5,288		2,402
Marketing		424		478		1,414		1,397
Net gain on deferred compensation benefits		-		1,200		-		2,797
Other		3,140		3,830		9,180		8,767
Total non-interest expense		35,834		28,948		93,152		81,108
INCOME BEFORE INCOME TAXES		27,241		32,636		93,371		96,325
Income tax expense		2,159		8,918		19,486		26,543
NET INCOME	$	25,082	$	23,718	$	73,885	$	69,782

Earnings per common share
Basic	$	37.21	$	34.24	$	109.90	$	100.18
Diluted	$	36.75	$	33.92	$	108.03	$	99.67

Weighted average number of common shares
Basic		673,986		692,727		672,319		696,572
Diluted		682,425		699,211		683,953		700,128

See accompanying notes to the unaudited consolidated financial statements.

Table of Contents

FARMERS & MERCHANTS BANCORP

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
(Dollars in thousands)	2026			2025			2026			2025
Net income	$	25,082		$	23,718		$	73,885		$	69,782
Other comprehensive (loss)/income
Unrealized (losses)/gains on available-for-sale securities		(46,912	)		8,722			(58,181	)		17,657
Reclassification adjustment for gains on available-for-sale securities		-			-			(45	)		-
Amortization of unrecognized gains/(losses) on securities transferred to held-to-maturity		11			(5	)		30			(19	)
Net unrealized (losses)/gains on securities		(46,901	)		8,717			(58,196	)		17,638
Income tax benefit/(expense)		13,866			(2,577	)		17,205			(5,214	)
Other comprehensive (loss)/income, net of tax		(33,035	)		6,140			(40,991	)		12,424
Total comprehensive (loss)/income	$	(7,953	)	$	29,858		$	32,894		$	82,206

See accompanying notes to the unaudited consolidated financial statements.

Table of Contents

FARMERS & MERCHANTS BANCORP

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(Unaudited)

	For the three and nine months ended September 30, 2026 and 2025

(Dollars in thousands, except share and per share amounts)	Common Shares			Amount		Additional Paid-In Capital			Retained Earnings			Accumulated Other Comprehensive (Loss)/Income			Treasury Shares			Treasury Stock			Total
Balance as of June 30, 2026		722,840		$	7	$	11,856		$	710,694		$	(11,468	)		(30,896	)	$	(32,072	)	$	679,017
Net income		-			-		-			25,082			-			-			-			25,082
Other comprehensive loss, net of tax		-			-		-			-			(33,035	)		-			-			(33,035	)
Issuance of restricted stock awards		15,289			-		-			-			-			-			-			-
Restricted stock surrendered for tax withholdings upon vesting		(4,002	)		-		(5,540	)		-			-			-			-			(5,540	)
Stock based compensation expense		-			-		7,929			-			-			-			-			7,929
Cash dividends declared ($5.60 per share)		-			-		-			(3,616	)		-			-			-			(3,616	)
Purchase of treasury stock		-			-		-			-			-			(4,714	)		(6,734	)		(6,734	)
Balance as of September 30, 2026		734,127		$	7	$	14,245		$	732,160		$	(44,503	)		(35,610	)	$	(38,806	)	$	663,103

Balance as of June 30, 2025		727,722		$	7	$	5,192		$	628,793		$	(13,082	)		(2,355	)	$	(2,378	)	$	618,532
Net income		-			-		-			23,718			-			-			-			23,718
Other comprehensive income, net of tax		-			-		-			-			6,140			-			-			6,140
Forfeiture of restricted stock awards		(1,416	)		-		-			-			-			-			-			-
Stock based compensation expense		-			-		3,009			-			-			-			-			3,009
Cash dividends declared ($5.00 per share)		-			-		-			(3,595	)		-			-			-			(3,595	)
Repurchase of common stock		(12	)		-		-			(12	)		-			-			-			(12	)
Adjustment common stock excise tax		-			-		-			12			-			-			-			12
Purchase of treasury stock		-			-		-			-			-			(2,528	)		(2,552	)		(2,552	)
Balance as of September 30, 2025		726,294		$	7	$	8,201		$	648,916		$	(6,942	)		(4,883	)	$	(4,930	)	$	645,252

(Dollars in thousands, except share and per share amounts)	Common Shares			Amount		Additional Paid-In Capital			Retained Earnings			Accumulated Other Comprehensive (Loss)/Income			Treasury Shares			Treasury Stock			Total
Balance as of December 31, 2025		728,560		$	7	$	11,550		$	669,262		$	(3,512	)		(30,656	)	$	(31,793	)	$	645,514
Net income		-			-		-			73,885			-			-			-			73,885
Other comprehensive loss, net of tax		-			-		-			-			(40,991	)		-			-			(40,991	)
Issuance of restricted stock awards		16,655			-		-			-			-			-			-			-
Restricted stock surrendered for tax withholdings upon vesting		(9,472	)		-		(11,843	)		-			-			-			-			(11,843	)
Forfeiture of restricted stock awards		(1,616	)		-		-			-			-			-			-			-
Stock based compensation expense, net of forfeitures		-			-		14,538			-			-			-			-			14,538
Cash dividends declared ($16.05 per share)		-			-		-			(10,987	)		-			-			-			(10,987	)
Purchase of treasury stock		-			-		-			-			-			(4,954	)		(7,013	)		(7,013	)
Balance as of September 30, 2026		734,127		$	7	$	14,245		$	732,160		$	(44,503	)		(35,610	)	$	(38,806	)	$	663,103


Balance as of December 31, 2024		699,798		$	7	$	-		$	592,431		$	(19,366	)		-		$	-		$	573,072
Net income		-			-		-			69,782			-			-			-			69,782
Other comprehensive income, net of tax		-			-		-			-			12,424			-			-			12,424
Issuance of restricted stock awards		30,818			-		-			-			-			-			-			-
Forfeiture of restricted stock awards		(1,416	)		-		-			-			-			-			-			-
Stock based compensation expense		-			-		8,201			-			-			-			-			8,201
Cash dividends declared ($14.30 per share)		-			-		-			(10,364	)		-			-			-			(10,364	)
Repurchase of common stock		(2,906	)		-		-			(2,933	)		-			-			-			(2,933	)
Purchase of treasury stock		-			-		-			-			-			(4,883	)		(4,930	)		(4,930	)
Balance as of September 30, 2025		726,294		$	7	$	8,201		$	648,916		$	(6,942	)		(4,883	)	$	(4,930	)	$	645,252

See accompanying notes to the unaudited consolidated financial statements.

Table of Contents

FARMERS & MERCHANTS BANCORP

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Nine Months Ended September 30,
(Dollars in thousands)	2026			2025
Cash flows from operating activities:
Net income	$	73,885		$	69,782
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses		2,500			2,400
Depreciation and amortization		2,316			2,311
Net accretion of securities premiums and discounts		(3,156	)		(1,083	)
Stock based compensation expense, net of forfeitures		14,538			8,201
Increase in cash surrender value of BOLI		(1,973	)		(1,869	)
Net gain on sale of OREO		(700	)		-
Decrease in deferred income taxes, net		14,551			4,010
Realized gain on sale of securities available-for-sale		(45	)		-
Net changes in:
Other assets		8,385			(3,152	)
Other liabilities		3,840			9,481
Net cash provided by operating activities		114,141			90,081
Cash flows from investing activities:
Net (increase)/decrease in loans and leases held for investment		(102,726	)		68,455
Purchase of available-for-sale securities		(78,311	)		(426,729	)
Purchase of held-to-maturity securities		(5,605	)		(8,847	)
Proceeds from sales, maturities, calls and pay downs of available-for-sale securities		111,825			39,542
Proceeds from maturities, calls and pay downs of held-to-maturity securities		40,223			43,807
Purchase of premises and equipment		(14,251	)		(5,348	)
Purchase of other investments		(6,565	)		(9,086	)
Proceeds from sale of OREO		5,840			-
Proceeds from sale of assets		-			60
Net cash used in investing activities		(49,570	)		(298,146	)
Cash flows from financing activities:
Net decrease/(increase) in deposits		(7,809	)		185,875
Cash dividends paid		(10,800	)		(9,943	)
Restricted stock vesting distribution		(11,843	)		-
Cash used in share repurchase program		-			(2,933	)
Purchase of treasury stock		(7,013	)		(4,930	)
Net cash (used in)/provided by financing activities		(37,465	)		168,069
Net change in cash and cash equivalents		27,106			(39,996	)
Cash and cash equivalents, beginning of period		144,864			212,563
Cash and cash equivalents, end of period	$	171,970		$	172,567

Supplemental disclosures of cash flow information
Cash paid for interest	$	44,852		$	47,495
Income taxes paid	$	10		$	10,002

Supplemental disclosures of non-cash transactions
Accrued cash dividend on restricted stock	$	(187	)	$	(421	)
Net (increase)/decrease in unrealized losses on available-for-sale securities	$	(58,226	)	$	17,657

See accompanying notes to the unaudited consolidated financial statements.

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FARMERS & MERCHANTS BANCORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1—Basis of Presentation and Significant Accounting Policies

The accompanying unaudited consolidated financial statements include the accounts of Farmers & Merchants Bancorp (“FMCB” or “Bancorp”), a bank holding company incorporated in the State of Delaware, and its wholly owned subsidiary, Farmers & Merchants Bank of Central California (“F&M Bank” or the “Bank”) (collectively, the “Company”).

These unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X as promulgated by the Securities and Exchange Commission (“SEC”). In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the financial position and results of operations for the periods presented have been included. Certain information and note disclosures have been condensed or omitted pursuant to the rules and regulations of the SEC and the accounting standards for interim financial statements. All significant intercompany transactions and balances have been eliminated.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect amounts reported in the financial statements. Various elements of the Company’s accounting policies, by their nature, are inherently subject to estimation techniques, valuation assumptions and other subjective assessments. In particular, management has identified one accounting policy that, due to the judgments, estimates and assumptions inherent in this policy, is significant to an understanding of the Bank’s financial statements. This policy relates to the determination of the allowance for credit losses on loans and leases held for investment. This policy and the related judgments, estimates and assumptions are described in greater detail in subsequent notes to the Unaudited Consolidated Financial Statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies and Estimates, in our Annual Report on Form 10-K for the year ended December 31, 2025 filed with the SEC on March 13, 2026 (“2025 Form 10-K”) and Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies and Estimates included in this Quarterly Report on Form 10-Q.

The information included in this Form 10-Q should be read in conjunction with our 2025 Form 10-K. Interim results are not necessarily indicative of results for a full year or any other interim period.

Summary of Significant Accounting Policies

Our accounting policies are described in Note 1 – Summary of Significant Accounting Policies, of our audited consolidated financial statements included in our 2025 Form 10-K. As of September 30, 2026, there were no significant changes to accounting policies from those disclosed in our audited consolidated financial statements included in our 2025 Form 10-K.

Use of estimates — The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported period. Actual results could differ from those estimates.

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FARMERS & MERCHANTS BANCORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Note 1—Basis of Presentation and Significant Accounting Policies—Continued

Recently Adopted Accounting Standards — The Accounting Standards Codification (“ASC”) is the FASB officially recognized source of authoritative GAAP applicable to all public and non-public non-governmental entities. Periodically, the FASB will issue Accounting Standard Updates (“ASU”) to its ASC. Rules and interpretive releases of the SEC under the authority of the federal securities laws are also sources of authoritative GAAP for the Company as an SEC registrant. All other accounting literature is non-authoritative.

In July 2025, the FASB issued ASU No. 2025-05, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets” (“ASU 2025-05”). ASU 2025-05 provides amendments that provide all entities with a practical expedient when estimating expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under Topic 606. The amendments are effective in fiscal years beginning after December 15, 2025, and interim reporting periods within those fiscal years. The Company adopted this new guidance on January 1, 2026, and there was no material impact on its consolidated financial statements.

Accounting Standards Pending Adoption — The following paragraphs provide descriptions of newly issued but not yet effective accounting standards that could have a material effect on the Company’s financial position or results of operations.

In November 2024, the FASB issued ASU No. 2024-03, “Income Statement – Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses” (“ASU 2024-03”), and in January 2025, the FASB issued ASU No. 2025-01, “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date” (“ASU 2025-01”). ASU 2024-03 requires additional disclosure of the nature of expenses included in the income statement as well as disclosures about specific types of expenses included in the expense captions presented in the income statement. ASU 2024-03, as clarified by ASU 2025-01, is effective for public business entities for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Both early adoption and retrospective application are permitted. The Company is currently evaluating the impact that the adoption of these standards will have on its consolidated financial statements and disclosures, but does not expect the impact to be material.

In December 2025, the FASB issued ASU No. 2025-11, “Interim Reporting (Topic 270): Narrow-Scope Improvements” (“ASU 2025-11”). ASU 2025-11 clarifies and improves the guidance for interim financial reporting by providing a list of required interim disclosures, clarifying the applicability of interim reporting requirements, and introducing a disclosure principle requiring entities to disclose events since the end of the last annual reporting period that have a material impact on the entity. The new guidance is effective for interim periods within annual periods beginning after December 15, 2027 and early adoption is permitted. The Company is currently evaluating the impact that the adoption of this new guidance will have on its financial presentation.

In December 2025, the FASB issued ASU No. 2025-12, “Codification Improvements” (“ASU 2025-12”). ASU 2025-12 is part of the FASB’s standing “evergreen” project and makes a broad set of technical corrections, clarifications, and other minor improvements across many Topics to make the Codification easier to understand and apply. The amendments will be effective for the Company beginning with the fiscal year ending December 31, 2027, and interim periods within that fiscal year. The Company is currently evaluating the impact of such amendments on the consolidated financial statements and related disclosures.

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FARMERS & MERCHANTS BANCORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Note 2—Investment Securities

The amortized cost, fair values, and unrealized gains and losses of the securities available-for-sale are as follows:

	Amortized Cost		Gross Unrealized
(Dollars in thousands)	Amortized Cost		Gains		Losses		Fair Value
As of September 30, 2026
U.S. Government-sponsored securities	$	1,778	$	4	$	5	$	1,777
Mortgage-backed securities⁽¹⁾		810,513		48		56,358		754,203
Commercial mortgage-backed obligations⁽¹⁾		1,233		-		76		1,157
Collateralized mortgage obligations⁽¹⁾		20,201		-		1,385		18,816
Municipal securities		66,022		-		4,412		61,610
Corporate securities		24,678		73		164		24,587
Other		310		-		-		310
Total available-for-sale securities	$	924,735	$	125	$	62,400	$	862,460

⁽¹⁾All mortgage-backed securities and collateralized mortgage obligations were issued by an agency or government sponsored entity of the U.S. Government.

	Amortized Cost		Gross Unrealized				Fair Value
(Dollars in thousands)	Amortized Cost		Gains		Losses		Fair Value
As of December 31, 2025
U.S. Government-sponsored securities	$	2,046	$	2	$	10	$	2,038
Mortgage-backed securities⁽¹⁾		834,820		9,140		17,720		826,240
Commercial mortgage-backed obligations⁽¹⁾		1,231		22		-		1,253
Collateralized mortgage obligations⁽¹⁾		21,087		5		362		20,730
Municipal securities		66,142		4,703		-		70,845
Corporate securities		29,567		171		-		29,738
Other		310		-		-		310
Total available-for-sale securities	$	955,203	$	14,043	$	18,092	$	951,154

⁽¹⁾All mortgage-backed securities and collateralized mortgage obligations were issued by an agency or government sponsored entity of the U.S. Government.

The book values, estimated fair values, and unrecognized gains and losses of investments classified as held-to-maturity are as follows:

	Amortized Cost		Gross Unrecognized				Fair Value		Allowance for Credit Losses
(Dollars in thousands)	Amortized Cost		Gains		Losses		Fair Value		Allowance for Credit Losses
As of September 30, 2026
Mortgage-backed securities⁽¹⁾	$	557,424	$	-	$	142,187	$	415,237	-
Collateralized mortgage obligations⁽¹⁾		58,250		-		12,424		45,826	-
Municipal securities		68,633		56		2,391		66,298	450
Total held-to-maturity securities	$	684,307	$	56	$	157,002	$	527,361	450

⁽¹⁾All mortgage-backed securities and collateralized mortgage obligations were issued by an agency or government sponsored entity of the U.S. Government.

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FARMERS & MERCHANTS BANCORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Note 2—Investment Securities—Continued

	Amortized Cost		Gross Unrecognized				Fair Value		Allowance for Credit Losses
(Dollars in thousands)	Amortized Cost		Gains		Losses		Fair Value		Allowance for Credit Losses
As of December 31, 2025
Mortgage-backed securities⁽¹⁾	$	586,001	$	88	$	115,773	$	470,316	-
Collateralized mortgage obligations⁽¹⁾		62,476		-		10,234		52,242	-
Municipal securities		70,164		1,011		997		70,178	450
Total held-to-maturity securities	$	718,641	$	1,099	$	127,004	$	592,736	450

⁽¹⁾ All mortgage-backed securities and collateralized mortgage obligations were issued by an agency or government sponsored entity of the U.S. Government.

The allowance for credit losses on held-to-maturity securities is a contra-asset valuation account that is deducted from the amortized cost basis of held-to-maturity securities to present the net amount expected to be collected. Management measures expected credit losses on held-to-maturity securities on a collective basis by major security type with each type sharing similar risk characteristics, and considers historical credit loss information that is adjusted for current conditions and reasonable and supportable forecasts. With regard to residential mortgage-backed securities issued by the U.S. government, or agencies thereof, it is expected that the securities will not be settled at prices less than the amortized cost basis of the securities as such securities are backed by the full faith and credit of and/or guaranteed by the U.S. government. Accordingly, no allowance for credit losses has been recorded for these securities. With regard to municipal securities issued by States and political subdivisions and other held-to-maturity securities, management considers (i) issuer bond ratings, (ii) historical loss rates for given bond ratings, (iii) whether issuers continue to make timely principal and interest payments under the contractual terms of the securities, (iv) internal forecasts and (v) whether or not such securities are guaranteed or pre-refunded by the issuers.

The following tables show the gross unrealized losses for available-for-sale securities, for which an allowance for credit losses has not been recorded, that have been in an unrealized loss position for less than 12 months or 12 months or more:

	September 30, 2026
	Less Than 12 Months				12 Months or More				Total
(Dollars in thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Available-for-Sale Securities
U.S. Government-sponsored securities	$	50	$	-	$	714	$	5	$	764	$	5
Mortgage-backed securities⁽¹⁾		683,552		35,111		59,558		21,247		743,110		56,358
Commerical mortgage-backed securities⁽¹⁾		1,157		76		-		-		1,157		76
Collateralized mortgage obligations⁽¹⁾		1,813		72		17,003		1,313		18,816		1,385
Municipal securities		61,610		4,412		-		-		61,610		4,412
Corporate securities		9,614		164		-		-		9,614		164
Total available-for-sale securities	$	757,796	$	39,835	$	77,275	$	22,565	$	835,071	$	62,400

⁽¹⁾All mortgage-backed securities and collateralized mortgage obligations were issued by an agency or government sponsored entity of the U.S. Government.

	December 31, 2025
	Less Than 12 Months						12 Months or More						Total
(Dollars in thousands)	Fair Value			Unrealized Losses			Fair Value			Unrealized Losses			Fair Value			Unrealized Losses
Available-for-Sale Securities
U.S. Government-sponsored securities		$	461		$	2		$	676		$	8		$	1,137		$	10
Mortgage-backed securities⁽¹⁾			60,935			244			75,647			17,476			136,582			17,720
Collateralized mortgage obligations⁽¹⁾			13,262			230			5,511			132			18,773			362
Total available-for-sale securities		$	74,658		$	476		$	81,834		$	17,616		$	156,492		$	18,092

⁽¹⁾ All mortgage-backed securities and collateralized mortgage obligations were issued by an agency or government sponsored entity of the U.S. Government.

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FARMERS & MERCHANTS BANCORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Note 2—Investment Securities—Continued

As of September 30, 2026, the Company held 323 available-for-sale securities of which 197 securities were in an unrealized loss position for less than twelve months and 96 securities were in an unrealized loss position for twelve months or more without an allowance for credit losses. Because the decline in fair value is attributable to changes in interest rates and not credit quality and because the Company does not have the intent to sell and it is likely that the Company will not be required to sell the securities prior to their anticipated recovery at maturity, it has been determined that there is no expected credit loss on these securities. Management evaluates the available-for-sale securities in an unrealized loss position, relying primarily on industry analyst reports and observations of market conditions and interest rate fluctuations.

The following tables present the activity in the allowance for credit losses for held-to-maturity securities by major type:

	September 30, 2026
(Dollars in thousands)	Municipal securities		Mortgage-backed securities		Collateralized mortgage obligations		Total
Allowance for credit losses - securities
Beginning balance	$	450	$	-	$	-	$	450
Provision for credit losses		-		-		-		-
Ending balance	$	450	$	-	$	-	$	450

	December 31, 2025
(Dollars in thousands)	Municipal securities		Mortgage-backed securities		Collateralized mortgage obligations		Total
Allowance for credit losses - securities
Beginning balance	$	450	$	-	$	-	$	450
Provision for credit losses		-		-		-		-
Ending balance	$	450	$	-	$	-	$	450

The amortized cost and estimated fair values of investment securities at September 30, 2026 by contractual final maturity are shown in the following table:

	Available-for-Sale				Held-to-Maturity
(Dollars in thousands)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Securities maturing in:
One year or less	$	5,401	$	5,406	$	2,727	$	2,703
After one year through five years		20,678		20,556		18,748		18,166
After five years through ten years		51,620		48,600		16,149		15,031
After ten years		847,036		787,898		646,683		491,461
Total	$	924,735	$	862,460	$	684,307	$	527,361

Maturities are based on the final contractual payment dates, and do not reflect the impact of contractual monthly principal payments, prepayments or early redemptions that may occur. Expected maturities of mortgage-backed and CMO securities may differ from contractual maturities because borrowers have the right to call or prepay obligations with or without call or prepayment penalties.

The Company monitors the credit quality of those held-to-maturity securities not issued by the U.S. government or one of its agencies or government sponsored entities, through the use of credit ratings. Credit ratings are reviewed and updated quarterly. Nonrated municipal investments consist primarily of

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FARMERS & MERCHANTS BANCORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Note 2—Investment Securities—Continued

bonds issued by political subdivisions such as housing authorities and reclamation districts. Nonrated municipal investments are monitored through financial covenants and review of repayment history. As of September 30, 2026, there were no past due principal or interest payments associated with held-to-maturity municipal securities. There were no holdings of securities of any one issuer, other than the U.S. Government and its agencies, in an amount greater than 10% of shareholders’ equity.

The following tables summarize the amortized cost of held-to-maturity municipal securities by credit rating as of the dates indicated:

	Held-to-Maturity
	Amortized Cost
(Dollars in thousands)	AAA/AA/A		BBB/BB/B		Not Rated		Total
September 30, 2026

Municipal securities	$	17,795	$	690	$	50,148	$	68,633
Total	$	17,795	$	690	$	50,148	$	68,633

	Held-to-Maturity
	Amortized Cost
(Dollars in thousands)	AAA/AA/A		BBB/BB/B		Not Rated		Total
December 31, 2025

Municipal securities	$	18,562	$	935	$	50,667	$	70,164
Total	$	18,562	$	935	$	50,667	$	70,164

Proceeds from sales and calls of investment securities were as follows:

	For the Nine Months Ended September 30,
(Dollars in thousands)	2026		2025
Gross proceeds	$	1,424	$	925
Gross gains		45		-
Gross losses		-		-

Pledged Securities

At September 30, 2026, investment securities carried at $695.7 million were pledged to secure public deposits, Federal Home Loan Bank (“FHLB”) borrowings, and other government agency deposits as required by law. This amount was $673.8 million at December 31, 2025.

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FARMERS & MERCHANTS BANCORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Note 3—Loans and Leases

Loans and leases as of the dates indicated consisted of the following:

(Dollars in thousands)	September 30, 2026			December 31, 2025
Loans and leases held for investment, net Real estate:
Commercial	$	1,561,785		$	1,480,906
Agricultural		691,846			705,668
Residential and home equity		405,457			405,080
Construction		97,595			128,179
Total real estate		2,756,683			2,719,833
Commercial & industrial		562,366			497,700
Agricultural		264,434			264,117
Commercial leases		175,156			181,004
Consumer and other		3,881			4,671
Total gross loans and leases		3,762,520			3,667,325
Unearned income		(18,177	)		(18,380	)
Total net loans and leases		3,744,343			3,648,945
Allowance for credit losses		(77,321	)		(76,375	)
Total loans and leases held for investment, net	$	3,667,022		$	3,572,570

At September 30, 2026, the portion of loans that were approved for pledging as collateral on borrowing lines with the FHLB and the Federal Reserve Bank (“FRB”) were $1.4 billion and $1.3 billion, respectively. The borrowing capacity on these loans was $904.7 million from the FHLB and $1.0 billion from the FRB at September 30, 2026.

The following tables show an aging analysis of the loan and lease portfolio, net of unearned income, for the periods indicated:

	September 30, 2026
(Dollars in thousands)	30-89 Days Past Due		90+ Days Past Due		Non-accrual		Total Past Due and Nonaccrual		Current		Total		Non-accrual with no ACL
Loans and leases held for investment, net Real estate:
Commercial	$	-	$	-	$	688	$	688	$	1,552,654	$	1,553,342	$	688
Agricultural		2,675		-		1,731		4,406		687,440		691,846		1,731
Residential and home equity		-		-		205		205		405,252		405,457		205
Construction		-		-		-		-		97,595		97,595		-
Total real estate		2,675		-		2,624		5,299		2,742,941		2,748,240		2,624
Commercial & industrial		-		-		1,530		1,530		560,836		562,366		1,530
Agricultural		1,344		-		-		1,344		263,090		264,434		-
Commercial leases		-		-		469		469		164,953		165,422		-
Consumer and other		4		-		-		4		3,877		3,881		-
Total loans and leases, net	$	4,023	$	-	$	4,623	$	8,646	$	3,735,697	$	3,744,343	$	4,154

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FARMERS & MERCHANTS BANCORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Note 3—Loans and Leases—Continued

	December 31, 2025
(Dollars in thousands)	30-89 Days Past Due		90+ Days Past Due		Non-accrual		Total Past Due and Nonaccrual		Current		Total		Non-accrual with no ACL
Loans and leases held for investment, net Real estate:
Commercial	$	7,248	$	-	$	750	$	7,998	$	1,464,585	$	1,472,583	$	750
Agricultural		-		-		-		-		705,668		705,668		-
Residential and home equity		-		-		-		-		405,080		405,080		-
Construction		-		-		-		-		128,179		128,179		-
Total real estate		7,248		-		750		7,998		2,703,512		2,711,510		750
Commercial & industrial		-		-		-		-		497,700		497,700		-
Agricultural		-		-		-		-		264,117		264,117		-
Commercial leases		1,659		-		-		1,659		169,288		170,947		-
Consumer and other		5		-		-		5		4,666		4,671		-
Total loans and leases, net	$	8,912	$	-	$	750	$	9,662	$	3,639,283	$	3,648,945	$	750

When borrowers are experiencing financial difficulty, the Company may agree to modify the contractual terms of a loan to a borrower in order to assist the borrower in repaying principal and interest owed to the Company. The Company’s modifications of loans to borrowers experiencing financial difficulty are generally in the form of term extensions, repayment plans, payment deferrals, forbearance agreements, interest rate reductions, forgiveness of interest and/or fees, or any combination thereof. Commercial loans modified to borrowers experiencing financial difficulty are primarily loans that are substandard or non-accrual, where the maturity date was extended and/or the modified interest rate and payment terms are not commensurate with the current market. Modifications on personal real estate loans are primarily those placed on forbearance plans, repayment plans, or deferral plans where monthly payments are suspended for a period of time or past due amounts are paid off over a certain period of time in the future or set up as a balloon payment at maturity. Modifications to certain credit card and other small consumer loans are often modified under debt counseling programs that can reduce the contractual rate or, in certain instances, forgive certain fees and interest charges. Other consumer loans modified to borrowers experiencing financial difficulty consist of various other workout arrangements with customers.

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FARMERS & MERCHANTS BANCORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Note 3—Loans and Leases—Continued

The following table presents the amortized cost of loans that were both experiencing financial difficulty and modified, by portfolio segment and type of modification, during the periods presented. The percentage of the amortized cost basis of loans that were modified to borrowers in financial distress as compared to the amortized cost basis of each portfolio segment of financing receivable is also presented below:

	Three Months Ended September 30, 2026
	Amortized cost associated with the following modification types:
(Dollars in thousands)	Maturity or term extension		Payment deferral		Total¹		Percentage of total loan segment
Loans and leases held for investment, net
Real estate:
Commercial	$	-	$	-	$	-		0.00	%
Agricultural		672		706		1,378		0.20	%
Residential and home equity		-		-		-		0.00	%
Construction		-		-		-		0.00	%
Total real estate		672		706		1,378		0.05	%
Commercial & industrial		1,995		-		1,995		0.35	%
Agricultural		-		-		-		0.00	%
Commercial leases		-		-		-		0.00	%
Consumer and other		-		-		-		0.00	%
Total	$	2,667	$	706	$	3,373		0.09	%

¹ Unfunded lending commitments related to loans modified to borrowers experiencing financial difficulty totaled $0 million during the three months ended September 30, 2026.

During the three months ended September 30, 2026, the Company modified one agricultural real estate borrower with three loans. Two of the loans had principal deferrals of nine months and one loan had a contractual term extension of nine months. The Company also modified one commercial & industrial loan with a contractual term extension of three months.

	Nine Months Ended September 30, 2026
	Amortized cost associated with the following modification types:
(Dollars in thousands)	Maturity or term extension		Payment deferral		Payment reduction		Total¹		Percentage of total loan segment
Loans and leases held for investment, net
Real estate:
Commercial	$	-	$	-	$	688	$	688		0.04	%
Agricultural		672		706		-		1,378		0.20	%
Residential and home equity		-		-		-		-		0.00	%
Construction		-		-		-		-		0.00	%
Total real estate		672		706		688		2,066		0.07	%
Commercial & industrial		3,126		-		-		3,126		0.56	%
Agricultural		-		-		-		-		0.00	%
Commercial leases		-		-		-		-		0.00	%
Consumer and other		-		-		-		-		0.00	%
Total	$	3,798	$	706	$	688	$	5,192		0.14	%

¹ Unfunded lending commitments related to loans modified to borrowers experiencing financial difficulty totaled $0 million during the nine months ended September 30, 2026.

Table of Contents

FARMERS & MERCHANTS BANCORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Note 3—Loans and Leases—Continued

During the nine months ended September 30, 2026, the Company modified one commercial real estate loan with a monthly payment reduction. The Company modified three agricultural real estate loans all related to the same borrower. Two of the loans had principal deferrals of nine months and one loan had a contractual term extension of nine months. Two commercial & industrial loans were modified with contractual term extensions of six and nine months. The residential loan modified during the first quarter 2026 has been paid in full.

	Three Months Ended September 30, 2025
	Amortized cost associated with the following modification types:
(Dollars in thousands)	Maturity or term extension		Payment deferral		Total¹		Percentage of total loan segment
Loans and leases held for investment, net
Real estate:
Commercial	$	-	$	-	$	-		0.00	%
Agricultural		-		-		-		0.00	%
Residential and home equity		56		-		56		0.01	%
Construction		-		-		-		0.00	%
Total real estate		56		-		56		0.00	%
Commercial & industrial		1,973		-		1,973		0.40	%
Agricultural		-		-		-		0.00	%
Commercial leases		-		-		-		0.00	%
Consumer and other		-		-		-		0.00	%
Total	$	2,029	$	-	$	2,029		0.06	%

¹ Unfunded lending commitments related to loans modified to borrowers experiencing financial difficulty totaled $0 million during the three months ended September 30, 2025.

During the three months ended September 30, 2025, the Company modified one residential first mortgage loan with a 10-year maturity extension and re-amortization and one commercial loan with a maturity extension of 5 months.

	Nine Months Ended September 30, 2025
	Amortized cost associated with the following modification types:
(Dollars in thousands)	Maturity or term extension		Payment deferral		Total¹		Percentage of total loan segment
Loans and leases held for investment, net
Real estate:
Commercial	$	-	$	-	$	-		0.00	%
Agricultural		983		1,656		2,639		0.37	%
Residential and home equity		89		-		89		0.02	%
Construction		-		-		-		0.00	%
Total real estate		1,072		1,656		2,728		0.10	%
Commercial & industrial		1,973		-		1,973		0.40	%
Agricultural		43		-		43		0.02	%
Commercial leases		-		-		-		0.00	%
Consumer and other		-		-		-		0.00	%
Total	$	3,088	$	1,656	$	4,744		0.13	%

¹ Unfunded lending commitments related to loans modified to borrowers experiencing financial difficulty totaled $0 million during the nine months ended September 30, 2025.

Table of Contents

FARMERS & MERCHANTS BANCORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Note 3—Loans and Leases—Continued

During the nine months ended September 30, 2025, the Company modified four agricultural real estate loans and one agricultural production loan, all related to the same agricultural borrower. Two of the loans had the contractual term extended by six months and three loans had principal and interest deferrals of six months. The Company also modified one home equity and one residential first mortgage loan with 10-year maturity extensions and re-amortizations and one commercial loan with a maturity extension of 5 months.

The Company closely monitors the performance of the loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of the modification efforts. A payment default is defined as a loan having a payment past due 90 days or more after a modification took place. The following table presents the performance of such loans that have been modified in the last 12 months:

	September 30, 2026
(Dollars in thousands)	30-59 Days Past Due		60-89 Days Past Due		Greater Than 89 Days Past Due		Total
Loans and leases held for investment, net
Real estate:
Commercial	$	-	$	-	$	688	$	688
Agricultural		-		-		-		-
Residential and home equity		-		-		-		-
Construction		-		-		-		-
Total real estate		-		-		688		688
Commercial & industrial		-		1,130		-		1,130
Agricultural		-		-		-		-
Commercial leases		-		-		-		-
Consumer and other		-		-		-		-
Total	$	-	$	1,130	$	688	$	1,818

During the nine months ended September 30, 2026, there was one commercial real estate loan with an amortized cost basis of $688,000 and one commercial and industrial loan with an amortized cost basis of $1.1 million which was modified within the preceding 12 months and experienced a payment default. The commercial real estate loan had a monthly payment reduction and the commercial and industrial loan had a maturity extension modification. Following its payment default, the commercial and industrial loan was deemed partially uncollectible and resulted in a partial charge-off. There was one agricultural real estate loan with an amortized cost basis of $176,000 and modified with a maturity extension and interest deferral, that experienced a payment default and was charged-off during the nine months ended September 30, 2025. There were no loans modified to borrowers with financial difficulty that had a payment default subsequent to modification during the three and nine months ended September 30, 2025.

The effect of modifications made to borrowers experiencing financial difficulty is already included in the ACL because of the measurement methodologies used to estimate the ACL; therefore, a change to the ACL is generally not recorded upon modification. If principal forgiveness is provided, that portion of the loan will be charged-off, resulting in a reduction of the amortized cost basis and a corresponding adjustment to the ACL. An assessment of whether the borrower is experiencing financial difficulty is made on the date of a modification.

Table of Contents

FARMERS & MERCHANTS BANCORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Note 3—Loans and Leases—Continued

The Company assigns a risk rating to all loans and leases and periodically performs detailed reviews of all such loans and leases over a certain threshold to identify credit risks and assess overall collectability. For smaller balance loans and leases, such as consumer and residential real estate, a credit grade is established at inception, and then updated only when the loan or lease becomes contractually delinquent or when the borrower requests a modification. For larger balance loans and leases, management monitors and analyzes the financial condition of borrowers and guarantors, trends in the industries in which borrowers operate and the fair values of collateral securing these loans and leases. These credit quality indicators are used to assign a risk rating to each individual loan or lease. These risk ratings can be grouped into five major categories, defined as follows:

Pass — A pass loan or lease is a strong credit with no existing or known potential weaknesses deserving of management's close attention. This category also includes “Watch” loans, which is a loan with an emerging weakness in either the individual credit or industry that requires additional attention. A credit may also be classified Watch if cash flows have not yet stabilized, such as in the case of a development project.

Special mention — A special mention loan or lease has potential weaknesses that deserve management's close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or lease or in the Company's credit position at some future date. Special mention loans and leases are not adversely classified and do not expose the Company to sufficient risk to warrant adverse classification.

Substandard — A substandard loan or lease is not adequately protected by the current financial condition and paying capacity of the borrower or the value of the collateral pledged, if any. Loans or leases classified as substandard have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt.

Well-defined weaknesses include inadequate cash flow or collateral support, a project's lack of marketability, failure to complete construction on time or the project's failure to fulfill economic expectations. They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected.

Doubtful — Loans or leases classified as doubtful have all the weaknesses inherent in those classified as substandard with the added characteristic that the weaknesses make collection or liquidation in full, based on currently known facts, conditions and values, highly questionable or improbable.

Loss — Loans or leases classified as loss are considered uncollectible. Once a loan or lease becomes delinquent and repayment becomes questionable, the Company will address collateral shortfalls with the borrower and attempt to obtain additional collateral. If this is not forthcoming and payment in full is unlikely, the Company will estimate its probable loss and immediately charge-off some or all of the balance.

Table of Contents

FARMERS & MERCHANTS BANCORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Note 3—Loans and Leases—Continued

The following tables present outstanding loan and lease balances held for investment net of unearned income by segment, credit risk rating categories, vintage year by segment of financing receivable, and current period gross charge-offs by year of origination as follows:

	September 30, 2026
	Term Loans Amortized Cost Basis by Origination Year
(Dollars in thousands)	2026		2025		2024		2023		2022		Prior		Revolving Loans Amortized Cost		Revolving Loans Converted to Term		Total
Net loans and leases held for investment
Real estate:
Commercial
Pass	$	121,150	$	196,271	$	35,117	$	95,239	$	130,756	$	476,784	$	355,876	$	141,461	$	1,552,654
Special mention		-		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		688		-		-		-		688
Total Commercial	$	121,150	$	196,271	$	35,117	$	95,239	$	131,444	$	476,784	$	355,876	$	141,461	$	1,553,342
Commercial
Current-period gross charge-offs	$	75	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	75

Agricultural
Pass	$	29,309	$	43,270	$	23,511	$	33,036	$	58,143	$	175,140	$	271,847	$	45,995	$	680,251
Special mention		-		3,132		-		-		-		3,032		3,699		-		9,863
Substandard		-		-		-		-		-		-		1,732		-		1,732
Total Agricultural	$	29,309	$	46,402	$	23,511	$	33,036	$	58,143	$	178,172	$	277,278	$	45,995	$	691,846
Agricultural
Current-period gross charge-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

Residential and home equity
Pass	$	26,403	$	33,506	$	26,079	$	27,959	$	47,080	$	190,682	$	53,204	$	339	$	405,252
Special mention		-		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		205		-		205
Total Residential and home equity	$	26,403	$	33,506	$	26,079	$	27,959	$	47,080	$	190,682	$	53,409	$	339	$	405,457
Residential and home equity
Current-period gross charge-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

Construction
Pass	$	-	$	-	$	-	$	-	$	-	$	-	$	97,595	$	-	$	97,595
Special mention		-		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-		-
Total construction	$	-	$	-	$	-	$	-	$	-	$	-	$	97,595	$	-	$	97,595
Construction
Current-period gross charge-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

Total Real estate	$	176,862	$	276,179	$	84,707	$	156,234	$	236,667	$	845,638	$	784,158	$	187,795	$	2,748,240

Commercial & industrial
Pass	$	43,226	$	35,130	$	12,557	$	19,781	$	9,257	$	14,165	$	399,888	$	24,769	$	558,773
Special mention		-		-		-		-		6		-		2,457		-		2,463
Substandard		-		-		-		-		-		-		-		1,130		1,130
Total Commercial & industrial	$	43,226	$	35,130	$	12,557	$	19,781	$	9,263	$	14,165	$	402,345	$	25,899	$	562,366
Commercial & industrial
Current-period gross charge-offs	$	-	$	148	$	-	$	734	$	-	$	1,050	$	-	$	-	$	1,932

Table of Contents

FARMERS & MERCHANTS BANCORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Note 3—Loans and Leases—Continued

	September 30, 2026
	Term Loans Amortized Cost Basis by Origination Year
(Dollars in thousands)	2026		2025		2024		2023		2022		Prior		Revolving Loans Amortized Cost		Revolving Loans Converted to Term		Total
Net loans and leases held for investment
Agricultural
Pass	$	1,686	$	292	$	2,636	$	1,858	$	1,522	$	2,584	$	244,796	$	9,040	$	264,414
Special mention		-		-		-		-		20		-		-		-		20
Substandard		-		-		-		-		-		-		-		-		-
Total Agricultural	$	1,686	$	292	$	2,636	$	1,858	$	1,542	$	2,584	$	244,796	$	9,040	$	264,434
Agricultural
Current-period gross charge-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

Commercial leases
Pass	$	13,198	$	23,495	$	26,270	$	60,945	$	18,420	$	22,625	$	-	$	-	$	164,953
Special mention		-		-		-		-		-		-		-		-		-
Substandard		-		-		-		469		-		-		-		-		469
Total Commercial leases	$	13,198	$	23,495	$	26,270	$	61,414	$	18,420	$	22,625	$	-	$	-	$	165,422
Commercial leases
Current-period gross charge-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

Consumer and other
Pass	$	546	$	805	$	229	$	353	$	104	$	770	$	883	$	-	$	3,690
Special mention		-		-		-		-		-		-		-		-		-
Substandard		187		-		-		-		-		4		-		-		191
Total Consumer and other	$	733	$	805	$	229	$	353	$	104	$	774	$	883	$	-	$	3,881
Consumer and other
Current-period gross charge-offs	$	23	$	3	$	-	$	-	$	-	$	-	$	-	$	-	$	26
Total net loans and leases
Pass	$	235,518	$	332,769	$	126,399	$	239,171	$	265,282	$	882,750	$	1,424,089	$	221,604	$	3,727,582
Special mention		-		3,132		-		-		26		3,032		6,156		-		12,346
Substandard		187		-		-		469		688		4		1,937		1,130		4,415
Total net loans and leases	$	235,705	$	335,901	$	126,399	$	239,640	$	265,996	$	885,786	$	1,432,182	$	222,734	$	3,744,343
Total current-period gross charge-offs	$	98	$	151	$	-	$	734	$	-	$	1,050	$	-	$	-	$	2,033

Table of Contents

FARMERS & MERCHANTS BANCORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Note 3—Loans and Leases—Continued

	December 31, 2025
	Term Loans Amortized Cost Basis by Origination Year
(Dollars in thousands)	2025		2024		2023		2022		2021		Prior		Revolving Loans Amortized Cost		Revolving Loans Converted to Term		Total
Net loans and leases held for investment
Real estate:
Commercial
Pass	$	201,486	$	38,557	$	103,052	$	135,472	$	192,814	$	356,496	$	290,112	$	146,371	$	1,464,360
Special mention		225		-		-		-		7,248		-		-		-		7,473
Substandard		-		-		-		750		-		-		-		-		750
Total Commercial	$	201,711	$	38,557	$	103,052	$	136,222	$	200,062	$	356,496	$	290,112	$	146,371	$	1,472,583
Commercial
Current-period gross charge-offs	$	-	$	-	$	-	$	380	$	-	$	-	$	-	$	-	$	380

Agricultural
Pass	$	46,027	$	23,735	$	35,874	$	62,515	$	41,110	$	161,982	$	274,736	$	48,493	$	694,472
Special mention		3,151		-		-		-		-		3,085		4,960		-		11,196
Substandard		-		-		-		-		-		-		-		-		-
Total Agricultural	$	49,178	$	23,735	$	35,874	$	62,515	$	41,110	$	165,067	$	279,696	$	48,493	$	705,668
Agricultural
Current-period gross charge-offs	$	-	$	-	$	180	$	939	$	-	$	-	$	-	$	-	$	1,119

Residential and home equity
Pass	$	35,670	$	29,212	$	31,874	$	50,922	$	76,178	$	128,370	$	52,266	$	352	$	404,844
Special mention		-		-		-		-		-		34		-		-		34
Substandard		-		-		-		-		-		-		202		-		202
Total Residential and home equity	$	35,670	$	29,212	$	31,874	$	50,922	$	76,178	$	128,404	$	52,468	$	352	$	405,080
Residential and home equity
Current-period gross charge-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

Construction
Pass	$	-	$	-	$	-	$	-	$	-	$	1,375	$	112,904	$	13,900	$	128,179
Special mention		-		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-		-
Total construction	$	-	$	-	$	-	$	-	$	-	$	1,375	$	112,904	$	13,900	$	128,179
Construction
Current-period gross charge-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

Total Real estate	$	286,559	$	91,504	$	170,800	$	249,659	$	317,350	$	651,342	$	735,180	$	209,116	$	2,711,510

Commercial & industrial
Pass	$	39,666	$	21,289	$	29,692	$	16,244	$	13,167	$	5,310	$	337,525	$	30,455	$	493,348
Special mention		-		-		-		40		-		-		50		4,262		4,352
Substandard		-		-		-		-		-		-		-		-		-
Total Commercial & industrial	$	39,666	$	21,289	$	29,692	$	16,284	$	13,167	$	5,310	$	337,575	$	34,717	$	497,700
Commercial & industrial
Current-period gross charge-offs	$	-	$	-	$	70	$	98	$	53	$	12	$	-	$	-	$	233

Table of Contents

FARMERS & MERCHANTS BANCORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Note 3—Loans and Leases—Continued

	December 31, 2025
	Term Loans Amortized Cost Basis by Origination Year
(Dollars in thousands)	2025		2024		2023		2022		2021		Prior		Revolving Loans Amortized Cost		Revolving Loans Converted to Term		Total
Net loans and leases held for investment
Agricultural
Pass	$	3,104	$	2,857	$	2,312	$	1,772	$	1,020	$	2,264	$	245,438	$	5,278	$	264,045
Special mention		-		-		-		29		-		-		-		43		72
Substandard		-		-		-		-		-		-		-		-		-
Total Agricultural	$	3,104	$	2,857	$	2,312	$	1,801	$	1,020	$	2,264	$	245,438	$	5,321	$	264,117
Agricultural
Current-period gross charge-offs	$	-	$	-	$	-	$	200	$	34	$	-	$	-	$	-	$	234

Commercial leases
Pass	$	25,516	$	29,201	$	67,198	$	21,749	$	5,854	$	21,429	$	-	$	-	$	170,947
Special mention		-		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-		-
Total Commercial leases	$	25,516	$	29,201	$	67,198	$	21,749	$	5,854	$	21,429	$	-	$	-	$	170,947
Commercial leases
Current-period gross charge-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

Consumer and other
Pass	$	1,244	$	478	$	609	$	234	$	23	$	1,001	$	879	$	-	$	4,468
Special mention		-		-		-		-		-		-		-		-		-
Substandard		192		-		-		-		-		11		-		-		203
Total Consumer and other	$	1,436	$	478	$	609	$	234	$	23	$	1,012	$	879	$	-	$	4,671
Consumer and other
Current-period gross charge-offs	$	37	$	3	$	-	$	-	$	-	$	10	$	-	$	-	$	50
Total net loans and leases
Pass	$	352,713	$	145,329	$	270,611	$	288,908	$	330,166	$	678,227	$	1,313,860	$	244,849	$	3,624,663
Special mention		3,376		-		-		69		7,248		3,119		5,010		4,305		23,127
Substandard		192		-		-		750		-		11		202		-		1,155
Total net loans and leases	$	356,281	$	145,329	$	270,611	$	289,727	$	337,414	$	681,357	$	1,319,072	$	249,154	$	3,648,945
Total current-period gross charge-offs	$	37	$	3	$	250	$	1,617	$	87	$	22	$	-	$	-	$	2,016

The Company, in the ordinary course of business, grants loans to the Company’s executive officers and directors, including their families and firms in which they are principal owners. Activity in such loans is summarized as follows:

(Dollars in thousands)	September 30, 2026			December 31, 2025

Balance at beginning of the period	$	13,300		$	15,626
New loans or advances during year		440			495
Effect of changes in composition of related parties		-			(80	)
Repayments		(674	)		(2,741	)
Balance at end of period	$	13,066		$	13,300

Table of Contents

FARMERS & MERCHANTS BANCORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Note 3—Loans and Leases—Continued

A loan or lease is considered collateral dependent when the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral. When management determines that foreclosure is probable, expected credit losses for collateral dependent loans or leases are based on the fair value of the collateral at the reporting date, adjusted for selling costs as appropriate. The collateral on the loans and leases is a significant portion of what secures the collateral dependent loans or leases, and significant changes to the fair value of the collateral can impact the allowance for credit losses.

The following tables present the amortized cost basis for collateral dependent loans and leases by type as of the dates indicated:

	September 30, 2026
(Dollars in thousands)	Real Estate		Vehicles and Equipment		Total
Collateral dependent loans and leases
Real estate:
Commercial	$	688	$	-	$	688
Agricultural		1,731		-		1,731
Residential and home equity		-		-		-
Construction		-		-		-
Total real estate		2,419		-		2,419
Commercial & industrial		1,130		-		1,130
Agricultural		-		-		-
Commercial leases		-		469		469
Consumer and other		-		-		-
Total gross loans and leases	$	3,549	$	469	$	4,018

	December 31, 2025
(Dollars in thousands)	Real Estate		Vehicles and Equipment		Total
Collateral dependent loans and leases
Real estate:
Commercial	$	7,998	$	-	$	7,998
Agricultural		-		-		-
Residential and home equity		-		-		-
Construction		-		-		-
Total real estate		7,998		-		7,998
Commercial & industrial		-		-		-
Agricultural		-		-		-
Commercial leases		-		-		-
Consumer and other		-		-		-
Total gross loans and leases	$	7,998	$	-	$	7,998

Table of Contents

FARMERS & MERCHANTS BANCORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Note 3—Loans and Leases—Continued

Allowance for Credit Losses

The allowance for credit losses (“ACL”) is the combination of the allowance for credit losses for loan and lease losses and the allowance for credit losses for unfunded loan commitments. The ACL for unfunded loan commitments is included within “Interest payable and other liabilities” on the consolidated balance sheets.

The following tables present a summary of the activity in the ACL for loan and lease losses and the ACL for unfunded loan commitments for the periods indicated:

	For the Three Months Ended September 30,
	2026								2025
(Dollars in thousands)	ACL for Loans and Leases			ACL for Unfunded Commitments		Allowance for Credit Losses			ACL for Loans and Leases			ACL for Unfunded Commitments		Allowance for Credit Losses
Balance at beginning of period	$	77,253		$	3,300	$	80,553		$	76,169		$	2,800	$	78,969
Provision for credit losses		1,500			-		1,500			700			-		700
Charge-offs		(1,437	)		-		(1,437	)		(962	)		-		(962	)
Recoveries		5			-		5			56			-		56
Net charge-offs		(1,432	)		-		(1,432	)		(906	)		-		(906	)
Balance at end of period	$	77,321		$	3,300	$	80,621		$	75,963		$	2,800	$	78,763

	For the Nine Months Ended September 30,
	2026								2025
(Dollars in thousands)	ACL for Loans and Leases			ACL for Unfunded Commitments		Allowance for Credit Losses			ACL for Loans and Leases			ACL for Unfunded Commitments		Allowance for Credit Losses
Balance at beginning of period	$	76,375		$	3,300	$	79,675		$	75,283		$	2,690	$	77,973
Provision for credit losses		2,500			-		2,500			2,290			110		2,400
Charge-offs		(2,033	)		-		(2,033	)		(1,804	)		-		(1,804	)
Recoveries		479			-		479			194			-		194
Net charge-offs		(1,554	)		-		(1,554	)		(1,610	)		-		(1,610	)
Balance at end of period	$	77,321		$	3,300	$	80,621		$	75,963		$	2,800	$	78,763

Changes in the ACL on loans and leases for the periods indicated are as follows:

	For the Three Months Ended September 30, 2026
(Dollars in thousands)	Balance at beginning of period		Provision for/(recapture of) credit losses			Charge-Offs			Recoveries		Balance at end of period
Allowance for credit losses:
Real estate:
Commercial	$	22,979	$	(488	)	$	-		$	1	$	22,492
Agricultural		23,007		(83	)		-			-		22,924
Residential and home equity		7,664		22			-			1		7,687
Construction		2,089		(168	)		-			-		1,921
Total real estate		55,739		(717	)		-			2		55,024
Commercial & industrial		8,646		1,776			(1,428	)		-		8,994
Agricultural		7,023		504			-			-		7,527
Commercial leases		5,618		(67	)		-			-		5,551
Consumer and other		227		4			(9	)		3		225
Total allowance for credit losses	$	77,253	$	1,500		$	(1,437	)	$	5	$	77,321

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FARMERS & MERCHANTS BANCORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Note 3—Loans and Leases—Continued

	For the Three Months Ended September 30, 2025
(Dollars in thousands)	Balance at beginning of period		Provision for/(recapture of) credit losses			Charge-Offs			Recoveries		Balance at end of period
Allowance for credit losses:
Real estate:
Commercial	$	20,946	$	568		$	-		$	-	$	21,514
Agricultural		24,469		812			(939	)		5		24,347
Residential and home equity		7,599		(126	)		-			-		7,473
Construction		2,766		54			-			-		2,820
Total real estate		55,780		1,308			(939	)		5		56,154
Commercial & industrial		7,326		30			-			19		7,375
Agricultural		6,982		(375	)		-			24		6,631
Commercial leases		5,858		(275	)		-			-		5,583
Consumer and other		223		12			(23	)		8		220
Total allowance for credit losses	$	76,169	$	700		$	(962	)	$	56	$	75,963

	For the Nine Months Ended September 30, 2026
(Dollars in thousands)	Balance at beginning of period		Provision for/(recapture of) credit losses			Charge-Offs			Recoveries		Balance at end of period
Allowance for credit losses:
Real estate:
Commercial	$	22,574	$	(18	)	$	(75	)	$	11	$	22,492
Agricultural		23,647		(799	)		-			76		22,924
Residential and home equity		7,620		23			-			44		7,687
Construction		2,311		(390	)		-			-		1,921
Total real estate		56,152		(1,184	)		(75	)		131		55,024
Commercial & industrial		7,355		3,241			(1,932	)		330		8,994
Agricultural		6,760		767			-			-		7,527
Commercial leases		5,861		(310	)		-			-		5,551
Consumer and other		247		(14	)		(26	)		18		225
Total allowance for credit losses	$	76,375	$	2,500		$	(2,033	)	$	479	$	77,321

	For the Nine Months Ended September 30, 2025
(Dollars in thousands)	Balance at beginning of period		Provision for/(recapture of) credit losses			Charge-Offs			Recoveries		Balance at end of period
Allowance for credit losses:
Real estate:
Commercial	$	20,382	$	1,307		$	(175	)	$	-	$	21,514
Agricultural		23,615		1,846			(1,119	)		5		24,347
Residential and home equity		7,340		127			-			6		7,473
Construction		3,055		(235	)		-			-		2,820
Total real estate		54,392		3,045			(1,294	)		11		56,154
Commercial & industrial		7,791		(326	)		(232	)		142		7,375
Agricultural		6,725		116			(234	)		24		6,631
Commercial leases		6,153		(570	)		-			-		5,583
Consumer and other		222		25			(44	)		17		220
Total allowance for credit losses	$	75,283	$	2,290		$	(1,804	)	$	194	$	75,963

Table of Contents

FARMERS & MERCHANTS BANCORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Note 4—Deposits

Certificates of deposit greater than and less than or equal to the FDIC insurance limit of $250,000 are summarized as follows:

(Dollars in thousands)	September 30, 2026		December 31, 2025
Certificates of deposit:
Certificates of deposit less than or equal to $250,000	$	343,883	$	344,818
Certificates of deposit greater than $250,000		409,125		398,263
Total certificates of deposit	$	753,008	$	743,081

Scheduled maturities for certificates of deposit are as follows for the years ending December 31:

(Dollars in thousands)	Amount
2026	$	337,142
2027		408,795
2028		3,907
2029		2,283
2030		350
Thereafter		531
Total certificates of deposit	$	753,008

Overdrawn deposit balances of $183,000 and $187,000 were classified as consumer loans at September 30, 2026 and December 31, 2025, respectively.

Note 5—Short-term borrowings

As of September 30, 2026 and December 31, 2025, committed lines of credit arrangements totaling $2.1 billion were available to the Company from the FHLB, FRB, and unaffiliated banks.

The Company is a member of the FHLB of San Francisco and as of September 30, 2026, had a borrowing capacity and a committed credit line of $905.7 million, which was secured by $1.4 billion in various real estate loans and investment securities pledged as collateral. Borrowings generally provide for interest at the then current published rate based on the borrowing term. The overnight borrowing rate was 4.34% as of September 30, 2026.

The Company has $1.3 billion in pledged loans with the FRB. As of September 30, 2026, the Company’s overnight borrowing capacity using the primary credit facilities from the Fed account was $1.0 billion. The borrowing rate was 3.75% as of September 30, 2026.

The Company has an unsecured borrowing capacity from unaffiliated banks of $133.0 million as of September 30, 2026.

There were no outstanding advances on the above borrowing facilities as of September 30, 2026 or December 31, 2025.

Table of Contents

FARMERS & MERCHANTS BANCORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Note 6—Fair Value

The Company uses fair value measurements to record fair value adjustments to certain financial and non-financial assets and liabilities and to determine fair value disclosures. Various financial instruments such as available-for-sale securities are recorded at fair value on a recurring basis. Additionally, from time to time, the Company may be required to record at fair value other assets and liabilities on a non-recurring basis, such as collateral dependent loans and other real estate owned. These non-recurring fair value adjustments typically involve lower of cost or fair value accounting or write-down of individual assets.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Depending on the nature of the asset or liability, the Company uses various valuation techniques and assumptions when estimating fair value. For accounting disclosure purposes, a three-level valuation hierarchy of fair value measurements has been established. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. The three levels are defined as follows:

•

Level 1 – inputs to the valuation methodology are quoted prices for identical assets or liabilities in active markets.

•

Level 2 – inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, and inputs that are observable for the assets or liabilities, either directly or indirectly (such as interest rates, yield curves, and prepayment speeds).

•

Level 3 – inputs to the valuation methodology are unobservable and significant to the fair value. These may be internally developed, using the Company’s best information and assumptions that a market participant would consider.

The carrying amounts and estimated fair values of financial instruments held by the Company are set forth below. Fair value estimates are made at a specific point in time based on relevant market information. They do not reflect any premium or discount that could result from offering for sale at one time the Company’s entire holdings of a particular financial instrument. Because no market exists for many of the Company’s financial instruments, fair value estimates are based on judgements regarding future expected loss experience, risk characteristics and economic conditions. These estimates are subjective, involve uncertainties, and cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

Management monitors the availability of observable market data to assess the appropriate classification of financial instruments within the fair value hierarchy. Changes in economic conditions or model-based valuation techniques may require the transfer of financial instruments from one fair value level to another. In such instances, the transfer is reported at the beginning of the reporting period.

Management evaluates the significance of transfers between levels based upon the nature of the financial instrument and size of the transfer relative to total assets, total liabilities or total earnings.

Securities classified as available-for-sale are reported at fair value on a recurring basis utilizing Level 1, 2 and 3 inputs. For these securities, the Company obtains fair value measurements from an independent pricing service. The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information and the bond's terms and conditions, among other things. Securities classified as held-to-maturity are reported at fair value on a non-recurring basis utilizing Level 1, 2 and 3 inputs in the same manner as available-for-securities. Level 3 - Valuation is based on model-based techniques that use one or more significant inputs or assumptions that are unobservable in the market.

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FARMERS & MERCHANTS BANCORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Note 6—Fair Value—Continued

The Company does not record all loans and leases at fair value on a recurring basis. However, from time to time, a loan or lease is considered collateral dependent and an allowance for credit losses is established. Once a loan or lease is identified as collateral dependent, management measures specific reserves in accordance with FASB ASC Topic 326. The fair value of collateral dependent loans or leases is estimated using one of several methods, including collateral value, market value of similar debt, enterprise value, and discounted cash flows. Collateral dependent loans and leases not requiring an allowance represent loans and leases for which the fair value of the expected repayments or collateral exceed the recorded investments in such loans and leases. Collateral dependent loans and leases where an allowance is established based on the fair value of collateral require classification in the fair value hierarchy. In determining the value of real estate collateral, the Company relies on external and internal appraisals of property values depending on the size and complexity of the real estate collateral. These appraisals may utilize a single valuation approach or a combination of approaches including sales comparison, cost and the income approach. Adjustments are often made in the appraisal process by the appraisers to take into account differences between the comparable sales and income and other available data. Such adjustments can be significant and typically result in a Level 3 classification of the inputs for determining fair value. The valuation technique used for Level 3 non-recurring collateral dependent loans is primarily the sales comparison approach less estimated selling costs. The Company maintains a list of qualified property appraisers who review appraisal reports for reasonableness. In the case of non-real estate collateral, reliance is placed on a variety of sources, including external estimates of value and judgments based on the experience and expertise of internal specialists. Values of all loan collateral are regularly reviewed by credit administration. Unobservable inputs to these measurements, which include estimates and judgments often used in conjunction with appraisals, are not readily quantifiable. These measurements are classified as Level 3.

Other Real Estate Owned (“OREO”) is reported at fair value on a non-recurring basis. Fair values are based on recent real estate appraisals. These appraisals may use a single valuation approach or a combination of approaches including sales comparison, cost and the income approach. Adjustments are often made in the appraisal process by the appraisers to take into account differences between the comparable sales and income and other available data. Such adjustments can be significant and typically result in a Level 3 classification of the inputs for determining fair value. The valuation technique used for Level 3 non-recurring OREO is primarily the sales comparison approach less estimated selling costs.

Table of Contents

FARMERS & MERCHANTS BANCORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Note 6—Fair Value—Continued

The following tables present information about the Company’s assets and liabilities measured at fair value on a recurring and non-recurring basis and indicate the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value for the periods indicated.

September 30, 2026			Fair Value Measurements
(Dollars in thousands)	Carrying Amount		Level 1		Level 2		Level 3		Total Fair Value
Fair valued on a recurring basis:
Financial assets
Available-for-sale securities
U.S. Government-sponsored securities	$	1,777	$	-	$	1,777	$	-	$	1,777
Mortgage-backed securities		754,203		-		754,203		-		754,203
Commercial mortgage-backed securities		1,157		-		1,157		-		1,157
Collateralized mortgage obligations		18,816		-		18,816		-		18,816
Municipal securities		61,610		-		61,610		-		61,610
Corporate securities		24,587		-		24,587		-		24,587
Other		310		-		310		-		310
Other equity investments	$	3,644	$	3,644	$	-	$	-	$	3,644

Fair valued on a non-recurring basis:
Collateral dependent loans	$	469	$	-	$	-	$	469	$	469

December 31, 2025			Fair Value Measurements
(Dollars in thousands)	Carrying Amount		Level 1		Level 2		Level 3		Total Fair Value
Fair valued on a recurring basis:
Financial assets
Available-for-sale securities
U.S. Government-sponsored securities	$	2,038	$	-	$	2,038	$	-	$	2,038
Mortgage-backed securities		826,240		-		826,240		-		826,240
Commercial mortgage-backed securities		1,253		-		1,253		-		1,253
Collateralized mortgage obligations		20,730		-		20,730		-		20,730
Municipal securities		70,845		-		70,845		-		70,845
Corporate securities		29,738		-		29,738		-		29,738
Other		310		-		310		-		310
Other equity investments	$	3,256	$	3,256	$	-	$	-	$	3,256
Derivatives not designated as hedging instruments	$	172	$	-	$	172	$	-	$	172

Financial liabilities
Derivatives not designated as hedging instruments	$	178	$	-	$	178	$	-	$	178

Table of Contents

FARMERS & MERCHANTS BANCORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Note 6—Fair Value—Continued

The following tables summarize the carrying amount and estimated fair values of the Company’s financial assets and liabilities not carried at fair value, and indicate the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value for the periods indicated.

September 30, 2026			Fair Value Measurements
(Dollars in thousands)	Carrying Amount		Level 1		Level 2		Level 3		Total Fair Value
Financial assets:
Cash and cash equivalents	$	171,970	$	171,970	$	-	$	-	$	171,970
Held-to-maturity securities, net		683,857		-		478,928		48,433		527,361
Non-marketable securities, at cost		15,549		-		15,549		-		15,549
Loans and leases, net		3,667,022		-		-		3,649,996		3,649,933

Financial liabilities:
Total deposits	$	4,970,017	$	-	$	4,965,926	$	-	$	4,965,926
Subordinated debentures		10,310		-		10,274		-		10,274

December 31, 2025			Fair Value Measurements
(Dollars in thousands)	Carrying Amount		Level 1		Level 2		Level 3		Total Fair Value
Financial assets:
Cash and cash equivalents	$	144,864	$	144,864	$	-	$	-	$	144,864
Held-to-maturity securities, net		718,191		-		542,161		50,575		592,736
Non-marketable securities, at cost		15,549		-		15,549		-		15,549
Loans and leases, net		3,572,570		-		-		3,591,336		3,591,336

Financial liabilities:
Total deposits	$	4,977,826	$	-	$	4,975,673	$	-	$	4,975,673
Subordinated debentures		10,310		-		10,810		-		10,810

Non-marketable securities include FHLB stock, Pacific Coast Bankers’ Bank stock and TIB, National Association stock, which are recorded at cost. Ownership of these stocks is restricted to member banks. Purchases and sales of these securities are at par value with the issuer. The fair value of these investments is equal to the carrying amount.

Table of Contents

FARMERS & MERCHANTS BANCORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Note 7—Earnings Per Share

Basic earnings per common share is computed by dividing net earnings allocated to common shareholders by the weighted average number of common shares outstanding during the applicable period. Diluted earnings per common share is computed using the weighted average number of shares determined for the basic earnings per common share computation plus the dilutive effects of outstanding restricted stock awards using the treasury stock method. Shares are excluded from the computations of diluted earnings per common share when their inclusion has an anti-dilutive effect. For the three and nine months ended September 30, 2026, there were no potential common shares that were anti-dilutive.

The following tables present the factors used in the earnings per common share computation for the periods indicated:

	Three Months Ended September 30,
(Dollars in thousands, except share and per share amounts)	2026		2025

Net income	$	25,082	$	23,718

Weighted average common shares outstanding for basic earnings per common share		673,986		692,727
Dilutive potential common shares		8,439		6,484
Shares used in computing diluted earnings per common share		682,425		699,211

Basic earnings per common share	$	37.21	$	34.24
Diluted earnings per common share	$	36.75	$	33.92

	Nine Months Ended September 30,
(Dollars in thousands, except share and per share amounts)	2026		2025

Net income	$	73,885	$	69,782

Weighted average common shares outstanding for basic earnings per common share		672,319		696,572
Dilutive potential common shares		11,634		3,556
Shares used in computing diluted earnings per common share		683,953		700,128

Basic earnings per common share	$	109.90	$	100.18
Diluted earnings per common share	$	108.03	$	99.67

Table of Contents

FARMERS & MERCHANTS BANCORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Note 8—Employee Benefit Plans

Executive Retirement Plan and Senior Management Retirement Plan

The Company, through the Bank, sponsored an Executive Retirement Plan for certain executive level employees and a Senior Management Retention Plan for other senior level employees (collectively the “Plans”). Effective November 29, 2024, all components of the Plans were terminated and frozen and no subsequent contributions were made to the Plans. On December 10, 2025, the account balances of the Plans were liquidated and paid out to eligible participants.

The Company incurred no expense for the Plans during the nine months ended September 30, 2026 and 2025 due to the termination of the Plans. The Company’s carrying value of the liability under the Plans for certain participants with different liquidation payout provisions was $2.5 million as of September 30, 2026 and $2.2 million as of December 31, 2025, which is included in interest payable and other liabilities on the balance sheet. The Company’s shares of stock held as investments in the Rabbi Trust of the Plans as of September 30, 2026 and December 31, 2025 totaled 1,014 and 1,073 shares with a historical cost basis of $1.0 million and $1.1 million, respectively. All amounts were fully funded into the Rabbi Trust as of September 30, 2026 and December 31, 2025. The consolidated investments held in the Rabbi Trust are recorded at fair value with changes in unrealized gains or losses recorded within non-interest income, and the equal and offsetting charges in the related liability are recorded in non-interest expense in the consolidated statements of income.

Net gains on the Plans’ investments were $2.8 million at September 30, 2025. Balances in non-qualified deferred compensation plans may be invested in financial instruments the market value of which fluctuates based upon trends in interest rates and stock prices.

Note 9—Stock-Based Compensation

Restricted Stock Award Plan

On November 25, 2024, the Company’s shareholders approved the Farmers & Merchants Bancorp 2025 Restricted Stock Retirement Plan (the “2025 Plan”). The 2025 Plan provides for the issuance of up to 80,000 shares of Company common stock to directors and employees of the Company and its subsidiaries and affiliates, and an annual increase on the first day of each fiscal year beginning with January 1, 2026 and ending with the last January 1 during the initial ten-year term of the plan, equal to (a) two and one-half percent (2.5%) of all outstanding shares on the last day of the immediately preceding fiscal year or (b) any lesser amount that the Personnel Committee sets for the purpose of that fiscal year. Pursuant to the 2.5% evergreen provision described above, the total number of shares of Company common stock available to be issued under the 2025 Plan increased by 17,448 shares to 97,448 as of January 1, 2026. Compensation expense is recognized over the vesting period of the awards based on the fair value of the stock at issue date. Due to the illiquidity of the stock, the fair value of the stock award at the grant date is determined using a volume weighted average price over a 30-day period as of the grant date. The awards contain a service condition, which requires the employees to provide services during the applicable vesting periods. The awards are comprised of one-year, two-year, three-year and four-year awards for employees and directors depending on their roles and responsibilities. The awards vest on a pro-rated basis over the life of the award. Total remaining shares issuable under the 2025 Plan were 60,213 at September 30, 2026; included in the number is 1,616 shares forfeited during 2026 and available for future awards under the 2025 Plan. The unvested restricted shares generally have voting rights and dividend rights; however, the dividends are paid to the holder only when the restricted shares vest. Dividends on forfeited restricted shares are also forfeited.

The Company had 27,461 and 29,402 unvested restricted shares outstanding as of September 30, 2026 and 2025, respectively. For the nine months ended September 30, 2026, the Company recognized $14.5 million in compensation cost related to shares granted under the 2025 Plan and $8.2 million for the nine months ended September 30, 2025. As of September 30, 2026, there was $14.5 million of total unrecognized compensation cost related to unvested shares granted under the 2025 Plan and $23.6 million for the nine months ended September 30, 2025. The remaining cost is expected to be recognized over a weighted-average period of 2.06 years.

Table of Contents

FARMERS & MERCHANTS BANCORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Note 9—Stock-Based Compensation—Continued

In August 2026, the Company accelerated restricted stock vesting for certain members of management. As a result of that modification, the Company recognized additional compensation expense of $3.7 million during the three and nine months ended September 30, 2026.

Note 10—Derivatives

Derivatives Not Designated as Hedging Instruments

As a customer accommodation, the Company may enter into interest rates swaps with its loan customers. The Company also enters into corresponding offsetting derivatives with third parties. While these derivatives represent economic hedges, they do not qualify as hedges for accounting purposes.

The fair value of these swaps are recorded as components of other assets and other liabilities in the Company’s consolidated balance sheets.

	September 30, 2026				December 31, 2025
(Dollars in thousands)	Notional Amount		Fair Value		Notional Amount		Fair Value
Derivatives not designated as hedging instruments:
Interest rate swaps related to customer loans	$	-	$	-	$	8,715	$	172
Total included in other assets			$	-			$	172

Derivatives not designated as hedging instruments:
Interest rate swaps related to customer loans	$	-	$	-	$	8,715	$	178
Total included in other liabilities			$	-			$	178

	Location of Gain or (Loss) Recognized in Income on	Three Months Ended September 30,				Nine Months Ended September 30,
(Dollars in thousands)	Derivatives	2026		2025		2026		2025
Derivatives not designated as hedging instruments:
Interest rate swaps related to loan customers	Other (expense) income	$	-	$	1	$	6	$	(11	)
Total		$	-	$	1	$	6	$	(11	)

Note 11—Commitments and Contingencies

In the normal course of business, the Company enters into financial instruments with off balance sheet risk in order to meet the financing needs of its customers and to reduce its own exposure to fluctuations in interest rates. These instruments include commitments to extend credit, letters of credit, and other types of financial guarantees. The Company had the following off balance sheet commitments as of the dates indicated.

(Dollars in thousands)	September 30, 2026		December 31, 2025

Commitments to extend credit, including unsecured commitments of $21,385 and $20,995 as of September 30, 2026 and December 31, 2025, respectively	$	1,064,327	$	1,049,468
Stand-by letters of credit, including unsecured commitments of $5,579 and $5,248 as of September 30, 2026 and December 31, 2025, respectively		21,367		19,250

Table of Contents

FARMERS & MERCHANTS BANCORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Note 11—Commitments and Contingencies—Continued

The Company's exposure to credit loss in the event of nonperformance by the other party with regard to standby letters of credit, undisbursed loan commitments, and financial guarantees is represented by the contractual notional amount of those instruments. Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. The Company uses the same credit policies in making commitments and conditional obligations as it does for recorded balance sheet items. The Company may or may not require collateral or other security to support financial instruments with credit risk. Evaluations of each customer's creditworthiness are performed on a case-by-case basis. The estimated exposure to loss from these commitments is included in the allowance for credit losses for unfunded loan commitments, which amounted to $3.3 million at September 30, 2026 and December 31, 2025.

Standby letters of credit are conditional commitments issued by the Company to guarantee performance of or payment for a customer to a third-party. Outstanding standby letters of credit at September 30, 2026 had maturity dates ranging from 1 to 42 months. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee.

The Company has commitments to fund investments in low-income housing tax credit investments (“LIHTC”) partnerships and limited liability companies. The Company invests in LIHTC partnerships and solar tax funds that are designed to generate a return primarily through the realization of federal tax credits. The Company accounts for these investments by amortizing the cost of tax credit investments over the life of the investment using a proportional amortization method, and tax credit investment amortization expense is a component of the provision for income taxes. At September 30, 2026 and December 31, 2025, the balance of the investments in LIHTC was $41.3 million and $45.5 million, respectively. These balances are reflected in the other assets line on the consolidated balance sheets. Total unfunded commitments related to the investments in LIHTC totaled $11.9 million and $16.8 million at September 30, 2026 and December 31, 2025, respectively. These balances are reflected in the interest payable and other liabilities line on the consolidated balance sheets. The Company expects to fulfill these commitments through 2044. Additionally, during the nine months ended September 30, 2026 and 2025, the Company recognized tax credits from its investments in LIHTC of $4.3 million and $3.9 million, respectively.

In the ordinary course of business, the Company becomes involved in litigation arising out of its normal business activities. Management, after consultation with legal counsel, believes that the ultimate liability, if any, resulting from the disposition of such claims would not be material in relation to the financial position of the Company.

The Company may be required to maintain average reserves on deposit with the FRB primarily based on deposits outstanding. Reserve requirements are offset by the Company’s vault cash and deposit balances maintained with the FRB.

Note 12—Subsequent Events

In accordance with ASC Topic 855, “Subsequent Events”, which establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued, the Company has evaluated all events or transactions that occurred after September 30, 2026 up through the date the Company issued the financial statements. During this period, there were no subsequent events that required recognition or disclosure.

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Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion is intended to provide a comprehensive review of the Company’s operating results and financial condition. The information contained in this section should be read in conjunction with the Unaudited Consolidated Financial Statements and the accompanying Notes to Unaudited Consolidated Financial Statements in this Quarterly Report on Form 10-Q included in “Part I. Item 1. Financial Statements.”

FORWARD-LOOKING INFORMATION

This Quarterly Report on Form 10–Q may contain certain forward-looking statements within the meaning of Section 27A of the Securities Act, as amended, and Section 21E of the Securities Exchange Act. These forward-looking statements reflect our current views and are not historical facts. These statements may include statements regarding projected performance for periods following the date of this report. These statements can generally be identified by use of phrases such as “believe,” “expect,” “will,” “seek,” “should,” “anticipate,” “estimate,” “intend,” “plan,” “target,” “project,” “commit” or other words of similar import. Similarly, statements that describe our future financial condition, results of operations, objectives, strategies, plans, goals or future performance and business are also forward-looking statements. Statements that project future financial conditions, results of operations, and shareholder value are not guarantees of performance and many of the factors that will determine these results and values are beyond our ability to control or predict. For those statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

These forward-looking statements involve known and unknown risks, uncertainties and other factors, including, but not limited to, those described in the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections and other parts of this report and the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 (“Form 10-K”), and our actual results may differ materially from those anticipated in these forward-looking statements. The following is a non-exclusive list of factors which could cause actual results to differ materially from forward-looking statements in this Quarterly Report on Form 10-Q:

■	changes in general economic conditions, either nationally, in California, or in our local markets;

■	inflation, changes in interest rates, securities market volatility and monetary fluctuations;

■	increases in competitive pressures among financial institutions and businesses offering similar products and services;

■	impacts of tariff policies by U.S. and foreign governments;

■	risks associated with negative events in the banking industry, and any legislative and/or bank regulatory actions, that could potentially impact earnings, liquidity and/or the availability of capital or which could increase the cost of our deposit insurance by the FDIC;

■	higher defaults in our loan and lease portfolio than we expect;

■	changes in management’s estimate of the adequacy of the allowance for credit losses;

■	risks associated with our growth and expansion strategy and related costs;

■	increased lending risks associated with our high concentration of real estate loans or agricultural loans;

■	legislative or regulatory changes, changes in monetary and fiscal policies or changes in accounting principles, policies or guidelines;

■	technological changes;

■	operational risks, including processing, information systems, cybersecurity, vendor problems, business interruption, and fraud;

■	regulatory or judicial proceedings; and

■	other factors and risks including those described under “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this report and the Company’s 2025 Form 10-K.

Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated, expected, projected, intended, or believed. Please take into account that forward-looking statements speak only as of the date of this Form 10-Q (or documents incorporated by reference, if applicable).

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The Company does not undertake any obligation to publicly correct or update any forward-looking statements if it later becomes aware that actual results are likely to differ materially from those expressed in such forward-looking statements, except as required by law.

Overview

Farmers & Merchants Bancorp (the “Company” or “FMCB”) is a Delaware registered bank holding company organized in 1999. As a registered bank holding company, FMCB is subject to regulation, supervision, and examination by the Federal Reserve and by the California Department of Financial Protection and Innovation (“DFPI”). The Company’s principal business is to serve as a holding company for Farmers & Merchants Bank of Central California (the “Bank” or “F&M Bank”) and for other banking or banking related subsidiaries, which the Company may establish or acquire. Over 110 years ago, August 1, 1916, marked the first day of business for Farmers & Merchants Bank, later renamed Farmers & Merchants Bank of Central California. The Bank was incorporated under the laws of the State of California and licensed as a state-chartered bank. The Bank’s first venture out of Lodi occurred when the Galt office opened in 1948. Since then, the Bank has opened full-service branches in Linden, Manteca, Riverbank, Modesto, Sacramento, Elk Grove, Turlock, Hilmar, Stockton, Merced, Walnut Creek, Concord, Rio Vista, Walnut Grove, Oakland, Napa, and Danville. As a legal entity separate and distinct from its subsidiary, the Company’s principal source of funds is, and will continue to be, dividends paid by and other funds received from the Bank. Legal limitations are imposed on the amount of dividends that may be paid and loans that may be made by the Bank to the Company.

The Company’s outstanding common stock as of September 30, 2026, consisted of 698,517 shares of common stock, $0.01 par value. No shares of preferred stock were issued or outstanding as of September 30, 2026. The common stock of the Company is not widely held or listed on any exchange. However, trades are reported on the OTCQX under the symbol “FMCB.”

The primary source of funding for the Company’s growth has been the generation of deposits, which the Company raises through its existing branch locations, newly opened branch locations, or through acquisitions. Loan growth over the years is the result of organic growth generated by the Company’s seasoned relationship managers and supporting associates who provide outstanding service and responsiveness to the Company’s clients.

The Company’s results of operations are largely dependent on net interest income. Net interest income is the difference between interest income earned on interest earning assets, which are comprised of loans and leases, investment securities, short-term investments and interest-bearing deposits at other banks, and the interest the Company pays on interest bearing liabilities, which are primarily deposits, and, to a lesser extent, other borrowings. Management strives to match the re-pricing characteristics of the interest earning assets and interest-bearing liabilities to protect net interest income from changes in market interest rates and changes in the shape of the yield curve.

The Company measures its performance by calculating the net interest margin, return on average assets, return on average equity and the efficiency ratio. Net interest margin is calculated by dividing net interest income, which is the difference between interest income on interest earning assets and interest expense on interest bearing liabilities, by average interest earning assets. Net interest income is the Company’s largest source of revenue. Interest rate fluctuations, as well as changes in the amount and type of earning assets and liabilities, combine to affect net interest income. The return on average assets is calculated by dividing the Company’s net income by its total average assets and the return on average equity is calculated by dividing the Company’s net income by its average shareholders’ equity. The efficiency ratio is calculated by dividing non-interest expense by the sum of net interest income and non-interest income.

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Critical Accounting Policies and Estimates

Our accounting policies are fundamental to understanding management’s discussion and analysis of results of operations and financial condition. We identify critical policies and estimates as those that require management to make particularly difficult, subjective, and/or complex judgments about matters that are inherently uncertain and because of the likelihood that materially different amounts would be reported under different conditions or using different assumptions. Our critical accounting policy relates to the allowance for credit losses on loans and leases held for investment. Further details are described in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2025 Form 10-K.

Impact of Recently Issued Accounting Standards

See Note 1. “Basis of Presentation and Significant Accounting Policies” to the Unaudited Consolidated Financial Statements in “Item 1. Financial Information” in this Quarterly Report on Form 10-Q.

Non-GAAP Measurements

We use certain non-GAAP financial measures to provide meaningful supplemental information regarding the Company’s operational performance and to enhance investors’ overall understanding of such financial performance. The methodology for determining these non-GAAP measures may differ among companies. We used the following non-GAAP measures in this Form 10-Q:

•

Tangible common equity ratio and tangible book value per common share: Given that the use of these measures is prevalent among banking regulators, investors, and analysts, we disclose them in addition to the related GAAP measures of return on average equity and book value per common share. The reconciliations of these non-GAAP measurements to the GAAP measurements are presented in the following tables for and as of the periods presented.

Tangible Common Equity Ratio and Tangible Book Value Per Common Share	September 30, 2026			December 31, 2025			September 30, 2025
(Dollars in thousands, except share and per share amounts)
Shareholders' equity	$	663,103		$	645,514		$	645,252
Less: Intangible assets		11,984			12,348			12,478
Tangible common equity	$	651,119		$	633,166		$	632,774

Total assets	$	5,699,055		$	5,690,110		$	5,629,867
Less: Intangible assets		11,984			12,348			12,478
Tangible assets	$	5,687,071		$	5,677,762		$	5,617,389

Tangible common equity ratio⁽¹⁾		11.45	%		11.15	%		11.26	%
Book value per common share⁽²⁾	$	949.30		$	924.93		$	894.43
Tangible book value per common share⁽³⁾	$	932.14		$	907.24		$	877.13
Common shares outstanding		698,517			697,904			721,411

⁽¹⁾Tangible common equity divided by tangible assets.

⁽²⁾ Total common equity divided by common shares outstanding.

⁽³⁾ Tangible common equity divided by common shares outstanding.

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Results of Operations

The following discussion and analysis is intended to provide a better understanding of the Company’s performance during each of the three- and nine-month periods ended September 30, 2026 and 2025 and the material changes in financial condition, operating income, and expenses of the Company and its subsidiaries as shown in the accompanying unaudited consolidated financial statements. Information related to the comparison of the results of operations for the years ended December 31, 2025, and 2024 can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the 2025 Form 10-K.

Factors that determine the level of net income include the volume of earning assets and interest-bearing liabilities, yields earned and rates paid, fee income, non-interest expense, the level of non-performing loans and other non-earning assets, and the amount of non-interest bearing liabilities supporting earning assets. Non-interest income includes card processing fees, service charges on deposit accounts, bank-owned life insurance income, gains/losses on the sale of investment securities, and gains/losses on deferred compensation plan investments. Non-interest expense consists primarily of salaries and employee benefits, cost of deferred compensation benefits, occupancy, data processing, deposit insurance, marketing, professional services, and other expenses. The efficiency ratio is calculated by dividing non-interest expense by net interest income plus non-interest income.

Earnings Performance

The following table presents performance metrics for the periods indicated:

	Three Months Ended September 30,						Nine Months Ended September 30,
(Dollars in thousands, except share and per share amounts)	2026			2025			2026			2025
Earnings Summary:
Interest income	$	73,631		$	70,592		$	217,819		$	207,791
Interest expense		15,307			15,175			45,242			45,365
Net interest income		58,324			55,417			172,577			162,426
Provision for credit losses		1,500			700			2,500			2,400
Non-interest income		6,251			6,867			16,446			17,407
Non-interest expense		35,834			28,948			93,152			81,108
Income before taxes		27,241			32,636			93,371			96,325
Income tax expense		2,159			8,918			19,486			26,543
Net Income	$	25,082		$	23,718		$	73,885		$	69,782

Per Common Share Data:
Basic earnings per common share	$	37.21		$	34.24		$	109.90		$	100.18
Diluted earnings per common share	$	36.75		$	33.92		$	108.03		$	99.67
Book value per common share	$	949.30		$	894.43		$	949.30		$	894.43
Tangible book value per common share⁽¹⁾	$	932.14		$	877.13		$	932.14		$	877.13

Performance Ratios:
Return on average assets		1.75	%		1.70	%		1.71	%		1.68	%
Return on average equity		14.74	%		15.10	%		14.75	%		15.28	%
Net interest margin (tax equivalent)		4.24	%		4.16	%		4.23	%		4.14	%
Yield on average loans and leases (tax equivalent)		6.11	%		6.05	%		6.10	%		6.06	%
Cost of average total deposits		1.20	%		1.22	%		1.19	%		1.24	%
Efficiency ratio		55.49	%		46.48	%		49.28	%		45.10	%
Loan-to-deposit ratio		75.70	%		74.16	%		75.70	%		74.16	%
Percentage of checking deposits to total deposits		47.23	%		48.69	%		47.23	%		48.69	%

Capital Ratios Bancorp:
Common equity tier 1 capital to risk-weighted assets		14.91	%		14.26	%		14.91	%		14.26	%
Tier 1 capital to risk-weighted assets		15.13	%		14.48	%		15.13	%		14.48	%
Risk-based capital to risk-weighted assets		16.39	%		15.74	%		16.39	%		15.74	%
Tier 1 leverage capital ratio		12.05	%		11.59	%		12.05	%		11.59	%
Tangible common equity ratio⁽¹⁾		11.45	%		11.26	%		11.45	%		11.26	%

⁽¹⁾ See “Non-GAAP Measurements”

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Average Balance and Yields

The following tables set forth a summary of average balances with corresponding interest income and interest expense as well as average yield, cost and net interest margin information for the periods presented. Average balances are derived from daily balances.

	For the Three Months Ended September 30,
	2026									2025
(Dollars in thousands)	Average Balance			Interest Income / Expense			Average Yield / Rate			Average Balance			Interest Income / Expense			Average Yield / Rate
ASSETS
Interest earnings deposits in other banks and federal funds sold	$	132,693		$	1,207			3.61	%	$	274,506		$	3,065			4.43	%
Investment securities:⁽¹⁾
Taxable securities		1,500,610			13,465			3.59	%		1,308,455			11,067			3.38	%
Non-taxable securities⁽²⁾		128,716			1,805			5.61	%		89,365			1,173			5.25	%
Total investment securities		1,629,326			15,270			3.75	%		1,397,820			12,240			3.50	%
Loans:⁽³⁾
Real estate:
Commercial		1,528,606			21,873			5.68	%		1,412,052			19,638			5.52	%
Agricultural		689,213			10,140			5.84	%		717,015			10,108			5.59	%
Residential and home equity		404,773			5,297			5.19	%		401,365			5,153			5.09	%
Construction		113,400			2,193			7.67	%		175,351			3,177			7.19	%
Total real estate		2,735,992			39,503			5.73	%		2,705,783			38,076			5.58	%
Commercial & industrial		539,494			9,651			7.10	%		483,192			8,862			7.28	%
Agricultural		260,957			4,790			7.28	%		258,126			5,182			7.96	%
Commercial leases		169,438			3,137			7.35	%		167,914			2,976			7.03	%
Consumer and other		4,271			74			6.87	%		5,206			89			6.78	%
Total loans and leases		3,710,152			57,155			6.11	%		3,620,221			55,185			6.05	%
Non-marketable securities		15,549			358			9.13	%		15,549			334			8.52	%
Total interest earning assets		5,487,720			73,990			5.35	%		5,308,096			70,824			5.29	%
Allowance for credit losses		(77,839	)								(76,505	)
Non-interest earning assets		326,929									356,589
Total average assets	$	5,736,810								$	5,588,180

LIABILITIES AND SHAREHOLDERS' EQUITY
Interest bearing deposits:
Demand	$	782,029		$	793			0.40	%	$	794,683		$	695			0.35	%
Savings and money market accounts		1,902,249			8,770			1.83	%		1,786,743			8,404			1.87	%
Certificates of deposit greater than $250,000		403,990			3,208			3.15	%		393,222			3,431			3.46	%
Certificates of deposit equal to or less than $250,000		340,948			2,357			2.74	%		343,364			2,451			2.83	%
Total interest bearing deposits		3,429,216			15,128			1.75	%		3,318,012			14,981			1.79	%
Subordinated debentures		10,310			179			6.89	%		10,310			194			7.47	%
Total interest bearing liabilities		3,439,526			15,307			1.77	%		3,328,322			15,175			1.81	%
Non-interest bearing deposits		1,558,001									1,539,835
Total funding		4,997,527			15,307			1.22	%		4,868,157			15,175			1.24	%
Other non-interest bearing liabilities		58,567									91,883
Shareholders' equity		680,716									628,140
Total average liabilities and shareholders' equity	$	5,736,810								$	5,588,180

Net interest income and margin⁽⁴⁾				$	58,683			4.24	%				$	55,649			4.16	%
Interest rate spread								3.58	%								3.48	%
Tax equivalent adjustment					(359	)								(232	)
Net interest income				$	58,324			4.22	%				$	55,417			4.14	%

⁽¹⁾ Excludes average unrealized losses of $27.2 million and $17.2 million for the three months ended September 30, 2026, and 2025, respectively, which are included in non-interest earning assets.

⁽²⁾ Yield and interest income are calculated on a fully taxable equivalent basis using the current statutory federal tax rate of 21%.

⁽³⁾ Loan interest income includes loan fees of $2.0 million and $1.6 million for the three months ended September 30, 2026 and 2025, respectively.

⁽⁴⁾Net interest margin is computed by dividing net interest income by average interest earning assets.

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	For the Nine Months Ended September 30,
	2026									2025
(Dollars in thousands)	Average Balance			Interest Income / Expense			Average Yield / Rate			Average Balance			Interest Income / Expense			Average Yield / Rate
ASSETS
Interest earnings deposits in other banks and federal funds sold	$	159,963		$	4,336			3.62	%	$	297,885		$	9,892			4.44	%
Investment securities:⁽¹⁾
Taxable securities		1,510,419			40,389			3.57	%		1,256,777			30,601			3.25	%
Non-taxable securities⁽²⁾		131,801			5,453			5.52	%		74,641			2,765			4.94	%
Total investment securities		1,642,220			45,842			3.72	%		1,331,418			33,366			3.34	%
Loans:⁽³⁾
Real estate:
Commercial		1,512,681			64,287			5.68	%		1,379,852			56,188			5.44	%
Agricultural		689,939			29,680			5.75	%		729,365			31,494			5.77	%
Residential and home equity		403,934			15,619			5.17	%		399,028			14,928			5.00	%
Construction		122,593			6,685			7.29	%		180,147			9,329			6.92	%
Total real estate		2,729,147			116,271			5.70	%		2,688,392			111,939			5.57	%
Commercial & industrial		508,688			27,140			7.13	%		489,567			26,952			7.36	%
Agricultural		260,754			14,562			7.47	%		262,733			15,647			7.96	%
Commercial leases		168,290			9,343			7.42	%		170,801			9,256			7.25	%
Consumer and other		4,732			228			6.44	%		5,155			265			6.87	%
Total loans and leases		3,671,611			167,544			6.10	%		3,616,648			164,059			6.06	%
Non-marketable securities		15,549			1,182			10.16	%		15,549			1,020			8.77	%
Total interest earning assets		5,489,343			218,904			5.33	%		5,261,500			208,337			5.29	%
Allowance for credit losses		(77,343	)								(76,202	)
Non-interest earning assets		336,913									349,700
Total average assets	$	5,748,913								$	5,534,998

LIABILITIES AND SHAREHOLDERS' EQUITY
Interest bearing deposits:
Demand	$	791,001		$	2,021			0.34	%	$	878,917			4,267			0.65	%
Savings and money market accounts		1,892,725			25,532			1.80	%		1,723,405			23,160			1.80	%
Certificates of deposit greater than $250,000		421,064			10,126			3.22	%		386,639			10,219			3.53	%
Certificates of deposit equal to or less than $250,000		342,560			7,031			2.74	%		331,959			7,139			2.88	%
Total interest bearing deposits		3,447,350			44,710			1.73	%		3,320,920			44,785			1.80	%
Short-term borrowings		1			-			0.00	%		1			-			0.00	%
Subordinated debentures		10,310			532			6.90	%		10,310			580			7.52	%
Total interest bearing liabilities		3,457,661			45,242			1.75	%		3,331,231			45,365			1.82	%
Non-interest bearing deposits		1,565,238									1,505,088
Total funding		5,022,899			45,242			1.20	%		4,836,319			45,365			1.25	%
Other non-interest bearing liabilities		58,016									89,604
Shareholders' equity		667,998									609,075
Total average liabilities and shareholders' equity	$	5,748,913								$	5,534,998

Net interest income and margin⁽⁴⁾				$	173,662			4.23	%				$	162,972			4.14	%
Interest rate spread								3.58	%								3.47	%
Tax equivalent adjustment					(1,085	)								(546	)
Net interest income				$	172,577			4.20	%				$	162,426			4.13	%

⁽¹⁾ Excludes average unrealized losses of $14.7 million and $20.8 million for the nine months ended September 30, 2026 and 2025, respectively, which are included in non-interest earning assets.

⁽²⁾ Yield and interest income are calculated on a fully taxable equivalent basis using the current statutory federal tax rate of 21%.

⁽³⁾ Loan interest income includes loan fees of $6.7 million and $5.1 million for the nine months ended September 30, 2026 and 2025, respectively.

⁽⁴⁾Net interest margin is computed by dividing net interest income by average interest earning assets.

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Third Quarter 2026 vs. Third Quarter 2025

Interest bearing deposits with banks and FRB balances are earning assets available to the Company. Average interest-bearing deposits with banks consisted primarily of FRB deposits. Balances with the FRB earned an average interest rate of 3.61% and 4.43% for the third quarter of 2026 and 2025, respectively. The decrease was the result of the Federal Open Market Committee (“FOMC”) decreasing interest rates by 75 basis points from September 2025 to December 2025 and a decrease in average interest-bearing deposits with banks, which decreased from $274.5 million for the quarter ended September 30, 2025 to $132.7 million for the quarter ended September 30, 2026. Interest income on interest bearing deposits with banks was $1.2 million and $3.1 million for the quarter ended September 30, 2026 and 2025, respectively.

The investment portfolio is also a component of the Company’s earning assets. Historically, the Company invested primarily in: (1) mortgage-backed securities issued by government-sponsored entities; (2) debt securities issued by the U.S. Treasury, government agencies and government-sponsored entities; and (3) investment grade bank-qualified municipal bonds. However, at certain times the Company has selectively added investment grade corporate securities (floating rate and fixed rate with maturities less than 7 years) to the portfolio in order to obtain yields that exceed government agency securities of equivalent maturity. Since the risk factor for these types of investments is generally lower than that of loans and leases, the yield earned on investments is generally less than that of loans and leases.

Average total investment securities were $1.6 billion and $1.4 billion for the quarter ended September 30, 2026 and 2025, respectively. The average tax equivalent yield on total investment securities was 3.75% and 3.50% for the quarter ended September 30, 2026 and 2025, respectively. The increase in the yield reflects the increase in yields on purchases in 2025 and during the second quarter of 2026.

Average loans and leases held for investment were $3.7 billion and $3.6 billion for the quarter ended September 30, 2026 and 2025, respectively. The average yield on the loan and lease portfolio was 6.11% and 6.05% for the quarter ended September 30, 2026 and 2025, respectively.

Average interest-bearing deposits were $3.4 billion and $3.3 billion for the quarter ended September 30, 2026 and 2025, respectively. The average rate paid on interest bearing deposits was 1.75% and 1.79% for the quarter ended September 30, 2026 and 2025, respectively. Total interest expense on interest bearing deposits was $15.1 million and $15.0 million for the quarter ended September 30, 2026 and 2025, respectively. The average rate paid on total funding costs was 1.22% and 1.24% for the quarter ended September 30, 2026 and 2025, respectively.

Nine Months Ended September 30, 2026 vs. Nine Months Ended September 30, 2025

Average interest-bearing deposits with banks consisted primarily of FRB deposits. Balances with the FRB earned an average interest rate of 3.62% and 4.44% for the first nine months of 2026 and 2025, respectively. The decrease was the result of the FOMC decreasing rates by 75 basis points from September 2025 to December 2025 and a decrease in average interest-bearing deposits with banks, which decreased from $297.9 million for the nine months ended September 30, 2025 to $160.0 million for the nine months ended September 30, 2026. Interest income on interest bearing deposits with banks was $4.3 million and $9.9 million for the nine months ended September 30, 2026 and 2025, respectively.

Average total investment securities were $1.6 billion and $1.3 billion for the nine months ended September 30, 2026 and 2025, respectively. The average tax equivalent yield on total investment securities was 3.72% and 3.34% for the nine months ended September 30, 2026 and 2025, respectively. The increase in the yield reflects the increase in yields on purchases in 2025 and during the second quarter of 2026.

Average loans and leases held for investment were $3.7 billion and $3.6 billion for the nine months ended September 30, 2026 and 2025, respectively. The average yield on the loan and lease portfolio was 6.10% and 6.06% for the nine months ended September 30, 2026 and 2025, respectively.

Average interest-bearing deposits were $3.4 billion and $3.3 billion for the nine months ended September 30, 2026 and 2025, respectively. The average rate paid on interest bearing deposits was 1.73% and 1.80% for the nine months ended September 30, 2026 and 2025, respectively. Total interest expense on interest bearing deposits was $44.7 million and $44.8 million for the nine months ended September 30, 2026 and 2025, respectively. The average rate paid on total funding costs was 1.20% and 1.25% for the nine months ended September 30, 2026 and 2025, respectively.

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Rate/Volume Analysis

The following table shows the change in interest income and interest expense and the amount of change attributable to variances in volume, rates and the combination of volume and rates based on the relative changes of volume and rates. For purposes of this table, the change in interest due to both volume and rate has been allocated to change due to volume and rate in proportion to the relationship of absolute dollar amounts of change in each.

	Three Months Ended September 30, 2026 compared with 2025									Nine Months Ended September 30, 2026 compared with 2025
	Increase (Decrease) Due to:									Increase (Decrease) Due to:
(Dollars in thousands)	Volume			Rate			Net			Volume			Rate			Net
Interest income:
Interest earnings deposits in other banks and federal funds sold	$	(1,367	)	$	(491	)	$	(1,858	)	$	(3,978	)	$	(1,578	)	$	(5,556	)
Investment securities:
Taxable securities		1,695			703			2,398			6,584			3,204			9,788
Non-taxable securities		547			85			632			2,332			356			2,688
Total investment securities		2,242			788			3,030			8,916			3,560			12,476
Loans:
Real estate:
Commercial		1,656			579			2,235			5,571			2,528			8,099
Agricultural		(397	)		429			32			(1,696	)		(118	)		(1,814	)
Residential and home equity		44			100			144			185			506			691
Construction		(1,183	)		199			(984	)		(3,118	)		474			(2,644	)
Total real estate		120			1,307			1,427			942			3,390			4,332
Commercial & industrial		1,009			(220	)		789			1,037			(849	)		188
Agricultural		55			(447	)		(392	)		(117	)		(968	)		(1,085	)
Commercial leases		27			134			161			(138	)		225			87
Consumer and other		(16	)		1			(15	)		(21	)		(16	)		(37	)
Total loans and leases		1,195			775			1,970			1,703			1,782			3,485
Non-marketable securities		-			24			24			-			162			162
Total interest income		2,070			1,096			3,166			6,641			3,926			10,567

Interest expense:
Interest bearing deposits:
Demand		(11	)		109			98			(392	)		(1,854	)		(2,246	)
Savings and money market accounts		533			(167	)		366			2,284			88			2,372
Certificates of deposit greater than $250,000		91			(314	)		(223	)		872			(965	)		(93	)
Certificates of deposit equal to or less than $250,000		(17	)		(77	)		(94	)		224			(332	)		(108	)
Total interest bearing deposits		596			(449	)		147			2,988			(3,063	)		(75	)

Subordinated debentures		-			(15	)		(15	)		-			(48	)		(48	)
Total interest expense		596			(464	)		132			2,988			(3,111	)		(123	)
Net interest income	$	1,474		$	1,560		$	3,034		$	3,653		$	7,037		$	10,690

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Comparison of Results of Operations for the Three and Nine Months Ended September 30, 2026 and 2025

	Three Months Ended September 30,				$ Better /			% Better /			Nine Months Ended September 30,				$ Better /			% Better /
(Dollars in thousands)	2026		2025		(Worse)			(Worse)			2026		2025		(Worse)			(Worse)
Selected Income Statement Information:
Interest income	$	73,631	$	70,592	$	3,039			4.31	%	$	217,819	$	207,791	$	10,028			4.83	%
Interest expense		15,307		15,175		(132	)		(0.87	%)		45,242		45,365		123			0.27	%
Net interest income		58,324		55,417		2,907			5.25	%		172,577		162,426		10,151			6.25	%
Provision for credit losses		1,500		700		(800	)		(114.29	%)		2,500		2,400		(100	)		(4.17	%)
Net interest income after provision for credit losses		56,824		54,717		2,107			3.85	%		170,077		160,026		10,051			6.28	%
Non-interest income		6,251		6,867		(616	)		(8.97	%)		16,446		17,407		(961	)		(5.52	%)
Non-interest expense		35,834		28,948		(6,886	)		(23.79	%)		93,152		81,108		(12,044	)		(14.85	%)
Income before income tax expense		27,241		32,636		(5,395	)		(16.53	%)		93,371		96,325		(2,954	)		(3.07	%)
Income tax expense		2,159		8,918		6,759			75.79	%		19,486		26,543		7,057			26.59	%
Net income	$	25,082	$	23,718	$	1,364			5.75	%	$	73,885	$	69,782	$	4,103			5.88	%

For the three and nine months ended September 30, 2026 and 2025, net income was $25.1 million and $73.9 million, respectively, compared with $23.7 million and $69.8 million for the same periods a year ago. For the three months ended September 30, 2026, the increase in net income was primarily the result of higher net interest income of $2.9 million, a $6.8 million decrease in income tax expense offset by an increase in non-interest expense of $6.9 million and a $0.8 million increase in provision for credit losses during the third quarter of 2026 compared to the same period in the prior year.

For the nine months ended September 30, 2026, the increase in net income was primarily the result of higher net interest income of $10.2 million, a decrease in income tax expense of $7.1 million offset by a $12.0 million increase in non-interest expense and a $1.0 million decrease in non-interest income during the nine months ended September 30, 2026, compared to the same period in 2025.

Net Interest Income and Net Interest Margin

For the quarters ended September 30, 2026 and 2025, net interest income was $58.3 million compared with $55.4 million, respectively. The increase in net interest income is primarily the result of the net interest margin (tax equivalent basis) increasing 8 basis points to 4.24% compared with 4.16% for the same period a year earlier. The increase in the net interest margin was primarily the result of the increase in investment securities income of $3.0 million as the average balance increased $231.5 million compared to the third quarter of 2025. The investment securities yield during the third quarter of 2026 increased 25 basis points from 3.50% to 3.75% compared to the third quarter of 2025. The loan yield increased 6 basis points from 6.05% to 6.11% compared to the third quarter of 2025. The yield on interest-bearing deposits decreased 4 basis points from 1.79% to 1.75% compared to the third quarter of 2025. The cost of average total deposits decreased 2 basis points from 1.22% to 1.20% compared to the third quarter of 2025.

For the nine months ended September 30, 2026 and 2025, net interest income was $172.6 million compared with $162.4 million, respectively. The increase is primarily the result of the net interest margin (tax equivalent basis) increasing 9 basis points to 4.23% compared with 4.14% for the same period a year earlier. The increase in the net interest margin was primarily the result of the 38 basis point increase in the investment securities yield from 3.34% to 3.72% compared to the first nine months of 2025, and average balances of the investment portfolio increased $310.8 million compared to the nine months ended September 30, 2025. The loan yield increased 4 basis points from 6.06% to 6.10% compared to the first nine months of 2025. The deposit yield decreased 7 basis points from 1.80% to 1.73% compared to the first nine months of 2025 and the average balance of interest-bearing deposits increased $126.4 million compared to the same period in 2025.

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Provision for Credit Losses

The provision for credit losses in each period is a charge against earnings in that period. The provision is the amount required to maintain the allowance for credit losses at a level that, in management’s judgment, is adequate to absorb expected credit losses over the life of the loans and leases, unfunded loan commitments and HTM securities portfolios.

Based on the Company’s evaluation of the credit quality of the loan and lease portfolio and the calculations of the allowance for credit losses under the current expected credit losses (“CECL”) methodology, the Company recorded a $1.5 million provision for credit losses during the three months ended September 30, 2026 compared to a $0.7 million provision for credit losses during the three months ended September 30, 2025. Net charge-offs during the three months ended September 30, 2026 were $1.4 million compared to $0.9 million for the same period a year earlier.

The Company recorded a $2.5 million provision for credit losses during the first nine months of 2026 compared to a $2.4 million provision for credit losses during the first nine months of 2025. Net charge-offs during the first nine months of 2026 and 2025 were $1.6 million.

Non-interest Income

	Three Months Ended September 30,				$ Better /			% Better /			Nine Months Ended September 30,				$ Better /			% Better /
(Dollars in thousands)	2026		2025		(Worse)			(Worse)			2026		2025		(Worse)			(Worse)
Non-interest Income:
Card processing	$	1,891	$	1,780	$	111			6.24	%	$	5,513	$	5,236	$	277			5.29	%
Service charges on deposit accounts		870		779		91			11.68	%		2,482		2,295		187			8.15	%
Increase in cash surrender value of BOLI		673		639		34			5.32	%		1,973		1,869		104			5.56	%
Net gain on sale of securities available-for-sale		-		-		-		NM				45		-		45		NM
Net gain on deferred compensation benefits		-		1,200		(1,200	)		N/A			-		2,797		(2,797	)		N/A
Other		2,817		2,469		348			14.09	%		6,433		5,210		1,223			23.47	%
Total non-interest income	$	6,251	$	6,867	$	(616	)		(8.97	%)	$	16,446	$	17,407	$	(961	)		(5.52	%)

Non-interest income decreased $0.6 million, or 8.97%, to $6.3 million for the quarter ended September 30, 2026, compared with $6.9 million for the same period a year earlier. The decrease was the result of a decrease in the net gain on deferred compensation of $1.2 million as the deferred compensation plan was distributed in December 2025. Excluding this item, non-interest income increased $0.6 million during the quarter ended September 30, 2026 compared to 2025.

Non-interest income decreased $1.0 million, or 5.52%, to $16.4 million for the nine months ended September 30, 2026, compared with $17.4 million for the same period of 2025. The decrease was the result of a decrease in the net gain on deferred compensation of $2.8 million as the deferred compensation plan was distributed in December 2025. Excluding this item, non-interest income increased $1.8 million for the nine months ended September 30, 2026 compared to the same period in 2025. This increase was primarily due to an increase in other non-interest income of $1.2 million which included a $1.3 million gain on the sale of all Visa Class B shares during the third quarter of 2026 to a third-party investment firm. Visa Class B shares, which are not traded on a stock exchange, were originally issued to U.S. member banks during Visa’s 2008 initial public offering.

The Company’s deferred compensation plans were terminated and frozen effective November 29, 2024, and all of the components of the plans were liquidated and paid out to eligible participants on December 10, 2025. The Company recorded net gains on deferred compensation plan investments of $1.2 million and $2.8 million for the three and nine months ended September 30, 2025, respectively, due to market value changes in the underlying assets and increases in interest and dividends. See Note 12, “Employee Benefit Plans,” located in Item 8. “Financial Statements and Supplementary Data” in the Company’s 2025 Form 10-K for a description of these plans. Balances in non-qualified deferred compensation plans may be invested in financial instruments whose market value fluctuates based upon trends in interest rates and stock prices. Although GAAP requires these investment gains/losses to be recorded in non-interest income, an offsetting entry is also required to be made to non-interest expense resulting in no net-effect on the Company’s net income.

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Non-interest Expense

	Three Months Ended September 30,				$ Better /			% Better /			Nine Months Ended September 30,				$ Better /			% Better /
(Dollars in thousands)	2026		2025		(Worse)			(Worse)			2026		2025		(Worse)			(Worse)
Non-interest Expense:
Salaries and employee benefits	$	25,798	$	18,912	$	(6,886	)		(36.41	%)	$	65,451	$	54,488	$	(10,963	)		(20.12	%)
Data processing		1,716		1,764		48			2.72	%		5,378		5,186		(192	)		(3.70	%)
Occupancy		1,357		1,259		(98	)		(7.78	%)		3,918		3,854		(64	)		(1.66	%)
Deposit insurance		846		719		(127	)		(17.66	%)		2,523		2,217		(306	)		(13.80	%)
Professional services		2,553		786		(1,767	)		(224.81	%)		5,288		2,402		(2,886	)		(120.15	%)
Marketing		424		478		54			11.30	%		1,414		1,397		(17	)		(1.22	%)
Net gain on deferred compensation benefits		-		1,200		1,200			N/A			-		2,797		2,797			N/A
Other		3,140		3,830		690			18.02	%		9,180		8,767		(413	)		(4.71	%)
Total non-interest expense	$	35,834	$	28,948	$	(6,886	)		(23.79	%)	$	93,152	$	81,108	$	(12,044	)		(14.85	%)

Non-interest expense increased $6.9 million, or 23.79%, to $35.8 million for the quarter ended September 30, 2026, compared with $28.9 million for the same period a year ago. This increase was primarily due to an increase of $6.9 million in salaries and employee benefits related to restricted stock award activities, an increase in the annual incentive compensation projections given the performance of the Company, and a $1.8 million increase in non-recurring professional service fees. These increases were partially offset by a decrease in the net gain on deferred compensation of $1.2 million as the deferred compensation plan was distributed in December 2025 and a $0.7 million decrease in other non-interest expense.

Non-interest expense increased $12.0 million, or 14.85%, to $93.2 million for the nine months ended September 30, 2026, compared with $81.1 million for the same period a year ago. This increase was primarily due to an $11.0 million increase in salaries and employee benefits related to restricted stock award activities, an increase in the annual incentive compensation projections given the performance of the Company, annual salary increases, an increase in payroll taxes, and nine months of stock compensation expense in 2026 versus seven and a half months in 2025 since the first restricted stock awards were issued in February 2025. Professional services increased $2.9 million due to higher legal and consulting services most of which were related to non-recurring corporate activities. These increases were partially offset by a decrease in the net gain on deferred compensation of $2.8 million as the deferred compensation plan was distributed in December 2025.

The Company’s deferred compensation plans were terminated and frozen effective November 29, 2024, and all of the components of the plans were liquidated and paid out to eligible participants on December 10, 2025. The Company recorded net gains on deferred compensation plan investments of $1.2 million and $2.8 million for the three and nine months ended September 30, 2025, respectively, due to market value changes in the underlying assets and increases in interest and dividends. See Note 12 “Employee Benefit Plans,” located in “Item 8. Financial Statements and Supplementary Data” in the Company’s 2025 Form 10-K for a description of these plans. Balances in non-qualified deferred compensation plans may be invested in financial instruments whose market value fluctuates based upon trends in interest rates and stock prices. Although GAAP requires these gains/losses on obligations to be recorded in non-interest expense, an offsetting entry is also required to be made to non-interest income resulting in no net-effect on the Company’s net income.

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Income Tax Expense

For the three and nine months ended September 30, 2026, income tax expense was $2.2 million and $19.5 million, respectively, compared to $8.9 million and $26.5 million for the same periods a year ago. The Company’s effective tax rate for the three and nine months ended September 30, 2026 was 7.93% and 20.87%, respectively, compared to 27.33% and 27.56% for the same periods in 2025. The decrease in the effective tax rate for the respective periods was primarily attributable to a $5.0 million benefit recognized during the third quarter of 2026 from the reversal of amounts associated with items previously treated as non-deductible for income tax purposes. In addition, the Company’s effective tax rate can often fluctuate from quarter to quarter due to changes in the mix of taxable and tax-exempt earning assets. The effective rates were lower than the combined Federal and State statutory rate of 30% primarily due to credits associated with low-income housing tax credit (“LIHTC”) investments, tax-exempt interest income on municipal securities and loans, and the reversal of the $5.0 million benefit as previously discussed.

The Company files U.S. and state income tax returns in jurisdictions with various statutes of limitations. The 2022 through 2025 federal tax years and the 2021 through 2025 state tax years remain subject to selection for examination as of September 30, 2026. As previously disclosed, the IRS conducted an examination of the Company’s 2023 tax return. On August 4, 2026, the Company was notified that the IRS has completed its examination report with no adjustments to the tax returns examined.

Balance Sheet Analysis

Total assets were $5.70 billion at September 30, 2026, compared with $5.69 billion at December 31, 2025, an increase of $8.9 million, or 0.16%. Total cash and cash equivalents increased $27.1 million from $144.9 million as of December 31, 2025 to $172.0 million as of September 30, 2026. The net investment portfolio decreased by $123.0 million, or 7.37%, to $1.55 billion at September 30, 2026, compared to $1.67 billion at December 31, 2025. Total loans and leases held for investment were $3.74 billion at September 30, 2026, compared with $3.65 billion at December 31, 2025, an increase of $95.4 million, or 2.61%. Total deposits were $4.97 billion at September 30, 2026, compared with $4.98 billion at December 31, 2025, a decrease of $7.8 million, or 0.16%. The Company’s loan to deposit ratio was 75.70% and 73.67% as of September 30, 2026 and December 31, 2025, respectively.

Cash and Cash Equivalents

The Company’s cash and cash equivalents consist of interest-bearing deposits with banks and overnight investments in Federal Reserve balances. Interest-bearing deposits with banks consisted primarily of FRB deposits. Since balances at the FRB are effectively risk free, the Company elected to maintain its excess cash at the FRB. Interest-bearing deposits with banks totaled $110.6 million at September 30, 2026 and $84.2 million at December 31, 2025. The Company’s total cash and cash equivalents as of September 30, 2026 represented 3.0% of the Company’s total assets as compared to 2.6% of total assets as of December 31, 2025.

Investment Securities

The Company’s net investment portfolio decreased by $123.0 million, or 7.37%, to $1.55 billion at September 30, 2026, compared to $1.67 billion at December 31, 2025. The Company uses its investment portfolio to manage interest rate and liquidity risks. The Company's total investment portfolio as of September 30, 2026 represented 27.14% of the Company’s total assets as compared to 29.35% of total assets at December 31, 2025.

Available-for-sale securities are carried at fair value and held-to-maturity securities are carried at amortized cost under GAAP. The carrying value of our portfolio of investment securities for the dates indicated are as follows:

(Dollars in thousands)	September 30, 2026		December 31, 2025
Available-for-sale securities
U.S. Government-sponsored securities	$	1,777	$	2,038
Mortgage-backed securities⁽¹⁾		754,203		826,240
Commercial mortgage-backed securities⁽¹⁾		1,157		1,253
Collateralized mortgage obligations⁽¹⁾		18,816		20,730
Municipal securities		61,610		70,845
Corporate securities		24,587		29,738
Other		310		310
Total available-for-sale securities	$	862,460	$	951,154

⁽¹⁾ All mortgage-backed securities and collateralized mortgage obligations were issued by an agency or government sponsored entity of the U.S. Government.

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(Dollars in thousands)	September 30, 2026			December 31, 2025
Held-to-maturity securities
Mortgage-backed securities⁽¹⁾	$	557,424		$	586,001
Collateralized mortgage obligations⁽¹⁾		58,250			62,476
Municipal securities		68,633			70,164
Total held-to-maturity securities	$	684,307		$	718,641
Allowance for credit losses		(450	)		(450	)
Total held-to-maturity securities	$	683,857		$	718,191

⁽¹⁾ All mortgage-backed securities and collateralized mortgage obligations were issued by an agency or government sponsored entity of the U.S. Government.

The following tables show the carrying value for final contractual maturities of investment securities and the weighted average yields of such securities, including the benefit of tax-exempt securities:

	As of September 30, 2026
	Within One Year					After One but Within Five Years					After Five but Within Ten Years					After Ten Years					Total
(Dollars in thousands)	Amount		Yield			Amount		Yield			Amount		Yield			Amount		Yield			Amount		Yield
Securities available-for-sale
U.S. Government-sponsored securities	$	-		0.00	%	$	32		5.65	%	$	343		5.43	%	$	1,402		4.46	%	$	1,777		4.67	%
Mortgage-backed securities⁽¹⁾		89		2.08	%		944		3.05	%		1,685		4.25	%		751,485		4.80	%		754,203		4.79	%
Commercial mortgage-backed securities ⁽¹⁾		-		0.00	%		-		0.00	%		-		0.00	%		1,157		5.79	%		1,157		5.79	%
Collateralized mortgage obligations⁽¹⁾		-		0.00	%		-		0.00	%		11,994		4.47	%		6,822		5.03	%		18,816		4.67	%
Municipal securities		-		0.00	%		-		0.00	%		34,578		4.71	%		27,032		4.67	%		61,610		4.69	%
Corporate securities		5,007		4.27	%		19,580		4.47	%		-		0.00	%		-		0.00	%		24,587		4.43	%
Other		310		6.89	%		-		0.00	%		-		0.00	%		-		0.00	%		310		6.89	%
Total securities available-for-sale	$	5,406		4.38	%	$	20,556		4.40	%	$	48,600		4.64	%	$	787,898		4.80	%	$	862,460		4.77	%

⁽¹⁾ All mortgage-backed securities and collateralized mortgage obligations were issued by an agency or government sponsored entity of the U.S. Government.

	As of September 30, 2026
	Within One Year					After One but Within Five Years					After Five but Within Ten Years					After Ten Years					Total
(Dollars in thousands)	Amount		Yield			Amount		Yield			Amount		Yield			Amount		Yield			Amount		Yield
Securities held-to-maturity
Mortgage-backed securities⁽¹⁾	$	-		0.00	%	$	86		2.26	%	$	4,607		1.66	%	$	552,731		1.90	%	$	557,424		1.90	%
Collateralized mortgage obligations⁽¹⁾		-		0.00	%		-		0.00	%		-		0.00	%		58,250		1.76	%		58,250		1.76	%
Municipal securities		2,727		6.85	%		18,662		5.37	%		11,542		6.19	%		35,702		7.74	%		68,633		6.80	%
Total securities held-to-maturity	$	2,727		6.85	%	$	18,748		5.36	%	$	16,149		4.90	%	$	646,683		2.21	%	$	684,307		2.38	%

⁽¹⁾ All mortgage-backed securities and collateralized mortgage obligations were issued by an agency or government sponsored entity of the U.S. Government.

	As of December 31, 2025
	Within One Year					After One but Within Five Years					After Five but Within Ten Years					After Ten Years					Total
(Dollars in thousands)	Amount		Yield			Amount		Yield			Amount		Yield			Amount		Yield			Amount		Yield
Securities available-for-sale
U.S. Government-sponsored securities	$	-		0.00	%	$	14		5.36	%	$	290		6.03	%	$	1,734		5.03	%	$	2,038		5.17	%
Mortgage-backed securities⁽¹⁾		362		2.40	%		981		2.53	%		2,816		4.09	%		822,081		4.76	%		826,240		4.75	%
Commercial mortgage-backed securities ⁽¹⁾		-		0.00	%		-		0.00	%		-		0.00	%		1,253		5.82	%		1,253		5.82	%
Collateralized mortgage obligations⁽¹⁾		-		0.00	%		-		0.00	%		-		0.00	%		20,730		4.74	%		20,730		4.74	%
Municipal securities		-		0.00	%		-		0.00	%		22,672		4.70	%		48,173		4.76	%		70,845		4.74	%
Corporate securities		5,000		4.34	%		24,738		4.72	%		-		0.00	%		-		0.00	%		29,738		4.66	%
Other		310		7.45	%		-		0.00	%		-		0.00	%		-		0.00	%		310		7.45	%
Total securities available-for-sale	$	5,672		4.39	%	$	25,733		4.64	%	$	25,778		4.65	%	$	893,971		4.76	%	$	951,154		4.75	%

⁽¹⁾ All mortgage-backed securities and collateralized mortgage obligations were issued by an agency or government sponsored entity of the U.S. Government.

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	As of December 31, 2025
	Within One Year					After One but Within Five Years					After Five but Within Ten Years					After Ten Years					Total
(Dollars in thousands)	Amount		Yield			Amount		Yield			Amount		Yield			Amount		Yield			Amount		Yield
Securities held-to-maturity
Mortgage-backed securities⁽¹⁾	$	-		0.00	%	$	48		2.64	%	$	5,649		1.68	%	$	580,304		1.90	%	$	586,001		1.90	%
Collateralized mortgage obligations⁽¹⁾		-		0.00	%		-		0.00	%		-		0.00	%		62,476		1.74	%		62,476		1.74	%
Municipal securities		1,918		3.57	%		18,363		4.56	%		13,004		4.09	%		36,879		5.10	%		70,164		4.73	%
Total securities held-to-maturity	$	1,918		3.57	%	$	18,411		4.55	%	$	18,653		3.36	%	$	679,659		2.06	%	$	718,641		2.16	%

⁽¹⁾ All mortgage-backed securities and collateralized mortgage obligations were issued by an agency or government sponsored entity of the U.S. Government.

Maturities are based on the final contractual payment dates, and do not reflect the impact of prepayments or early redemptions that may occur. Expected maturities of mortgage-backed and CMO securities may differ from contractual maturities because borrowers have the right to call or prepay obligations with or without penalties. The Company evaluates securities for expected credit losses at least on a quarterly basis, and more frequently when economic or market concerns warrant such evaluation.

Loans and Leases

Loans and leases can be categorized by borrowing purpose and use of funds. For detailed descriptions of the various loan types offered by the Company see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2025 Form 10-K.

The Company's loan and lease portfolio at September 30, 2026 totaled $3.8 billion, an increase of $95.2 million, or 2.60%, from December 31, 2025, primarily due to increased lending activity in our commercial real estate and commercial and industrial portfolios.

The following table sets forth the distribution of the loan and lease portfolio by type and percent at the dates indicated:

	September 30, 2026					December 31, 2025
(Dollars in thousands)	Dollars		Percent of Total			Dollars		Percent of Total
Gross loans and leases
Real estate:
Commercial	$	1,561,785		41.51	%	$	1,480,906		40.37	%
Agricultural		691,846		18.39	%		705,668		19.24	%
Residential and home equity		405,457		10.78	%		405,080		11.05	%
Construction		97,595		2.59	%		128,179		3.50	%
Total real estate		2,756,683		73.27	%		2,719,833		74.16	%
Commercial & industrial		562,366		14.95	%		497,700		13.57	%
Agricultural		264,434		7.03	%		264,117		7.20	%
Commercial leases		175,156		4.65	%		181,004		4.94	%
Consumer and other		3,881		0.10	%		4,671		0.13	%
Total gross loans and leases	$	3,762,520		100.00	%	$	3,667,325		100.00	%

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The following table shows the maturity distribution and interest rate sensitivity of the loan and lease portfolio of the Company at September 30, 2026.

	Loan Contractual Maturity
(Dollars in thousands)	One Year or Less		After One But Within Five Years		After Five But Within Fifteen Years		After Fifteen Years		Total
Gross loan and leases:
Real estate:
Commercial	$	124,598	$	766,355	$	643,925	$	26,907	$	1,561,785
Agricultural		23,851		201,984		435,727		30,284		691,846
Residential and home equity		225		6,724		123,984		274,524		405,457
Construction		57,008		35,521		5,066		-		97,595
Total real estate		205,682		1,010,584		1,208,702		331,715		2,756,683
Commercial & industrial		185,923		299,896		74,334		2,213		562,366
Agricultural		139,092		119,172		6,170		-		264,434
Commercial leases		3,913		92,786		78,457		-		175,156
Consumer and other		622		2,778		40		441		3,881
Total gross loans and leases	$	535,232	$	1,525,216	$	1,367,703	$	334,369	$	3,762,520
Rate structure for loans and leases
Fixed rate	$	142,633	$	1,031,870	$	674,328	$	179,664	$	2,028,495
Adjustable rate		392,599		493,346		693,375		154,705		1,734,025
Total gross loans and leases	$	535,232	$	1,525,216	$	1,367,703	$	334,369	$	3,762,520

The following table summarizes the loans for which the accrual of interest has been discontinued and OREO (as hereinafter defined) at the dates indicated:

(Dollars in thousands)	September 30, 2026			December 31, 2025
Non-performing assets:
Non-accrual loans and leases
Real estate:
Commercial	$	688		$	750
Agricultural		1,731			-
Residential and home equity		205			-
Construction		-			-
Total real estate		2,624			750
Commercial & industrial		1,530			-
Agricultural		-			-
Commercial leases		469			-
Consumer and other		-			-
Total non-performing loans and leases		4,623			750
Other real estate owned ("OREO")		-			-
Total non-performing assets	$	4,623		$	750

Selected ratios:
Non-performing loans to total loans and leases		0.12	%		0.02	%
Non-performing assets to total assets		0.08	%		0.01	%

Non-Accrual Loans and Leases – Accrual of interest on loans and leases is generally discontinued when a loan or lease becomes contractually past due by 90 days or more with respect to interest or principal. When loans and leases are 90 days past due, but in management's judgment are well secured and in the process of collection, they may not be classified as non-accrual. When a loan or lease is placed on non-accrual status, all interest previously accrued but not collected is reversed. Income on such loans and leases is then recognized only to the extent that cash is received and where the future collection of principal is probable.

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Non-accrual loans and leases at September 30, 2026 were $4.6 million, an increase of $3.9 million from December 31, 2025. The increase was primarily due to two agricultural real estate loans for one borrower being placed on non-accrual during the second quarter of 2026 and two commercial and industrial loans, one residential and home equity loan, and one commercial lease being placed on non-accrual during the third quarter of 2026.

Although management believes that non-performing loans and leases are generally well-secured and that potential losses are provided for in the Company’s allowance for credit losses, there can be no assurance that future deterioration in economic conditions and/or collateral values will not result in future credit losses.

Other Real Estate Owned – OREO represents real property taken either through foreclosure or through a deed in lieu thereof from the borrower. The Company records all OREO properties at amounts equal to or less than the fair market value of the properties based on current independent appraisals reduced by estimated selling costs. The Company reported no OREO at September 30, 2026 and December 31, 2025.

Loan Modifications to Borrowers Experiencing Financial Difficulties – In the normal course of business, the Company may execute loan modifications to borrowers experiencing financial difficulties. Some of these modifications include: term extension, principal forgiveness, rate reduction, other-than-insignificant payment delay, or any combination of those. ASU 2022-02 requires certain disclosure of loans and leases that have been modified within the past 12 months and the effects that those modifications had on the modified loans and leases. Because the effect of most modifications made to borrowers experiencing financial difficulty is already included in the allowance for credit losses and because of the measurement methodologies used to estimate the allowance, a change to the allowance for credit losses is generally not recorded upon modification. Occasionally, the Company modifies loans by providing principal forgiveness that is deemed to be uncollectible; therefore, that portion of the loan is written off, resulting in a reduction of the amortized cost basis and a corresponding adjustment to the allowance for credit losses.

The Company modified six loans in the aggregate amount of $5.2 million, during the nine months ended September 30, 2026. There were two loans modified within the twelve months prior to September 30, 2026 that had a payment default and were past due at September 30, 2026.

The Company modified nine loans, with five borrowers, in the aggregate amount of $7.0 million, during the year ended December 31, 2025. These loans were current at December 31, 2025.

Allowance for Credit Losses—Loans and Leases

The Company maintains an allowance for credit losses (“ACL”) under ASC Topic 326, Financial Instruments – Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments (“CECL”). The allowance is established through a provision for credit losses, which is charged to expense. Additions to the allowance are expected to maintain the adequacy of the total allowance after credit losses and loan and lease growth. Credit exposures determined to be uncollectible are charged against the allowance. Cash received on previously charged-off amounts is recorded as a recovery to the allowance. The overall allowance consists of two primary components: specific reserves related to individually evaluated loans and leases and general reserves comprised of both quantitative and qualitative factors for current expected credit losses related to loans and leases that are not individually evaluated. The Company uses the Weighted Average Remaining Maturity (“WARM”) methodology to calculate the ACL, as this method is deemed the most appropriate given the Company’s size and complexity. See Note 1 “Summary of Significant Accounting Policies - Allowance for Credit Losses – Loans and Leases” in our 2025 Form 10-K.

The allowance for credit losses is the combination of the allowance for credit losses on loan and lease losses and the allowance for credit losses on unfunded loan commitments. The ACL for unfunded loan commitments is included within “Interest payable and other liabilities” on the consolidated balance sheets.

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The following table sets forth the activity in our ACL on loans and leases held for investment and unfunded loan commitments for the periods indicated:

	Nine Months Ended September 30,
(Dollars in thousands)	2026			2025
Allowance for credit losses:
Balance at beginning of year	$	79,675		$	77,973
Provision for credit losses:
Allowance for credit losses - loans and leases		2,500			2,290
Allowance for credit losses - unfunded loan commitments		-			110
Total provision for credit losses		2,500			2,400
Charge-offs:
Real estate:
Commercial		(75	)		(175	)
Agricultural		-			(1,119	)
Residential and home equity		-			-
Construction		-			-
Total real estate		(75	)		(1,294	)
Commercial & industrial		(1,932	)		(232	)
Agricultural		-			(234	)
Commercial leases		-			-
Consumer and other		(26	)		(44	)
Total (charge-offs)		(2,033	)		(1,804	)
Recoveries:
Real estate:
Commercial		11			-
Agricultural		76			5
Residential and home equity		44			6
Construction		-			-
Total real estate		131			11
Commercial & industrial		330			142
Agricultural		-			24
Commercial leases		-			-
Consumer and other		18			17
Total recoveries		479			194
Net (charge-offs)		(1,554	)		(1,610	)
Balance at end of period	$	80,621		$	78,763

Allowance for credit losses - loans and leases		77,321			75,963
Allowance for credit losses - unfunded loan commitments		3,300			2,800
Total allowance for credit losses	$	80,621		$	78,763

Selected financial information:
Loans and leases held for investment, net of unearned income	$	3,744,343		$	3,532,383
Average loans and leases		3,671,611			3,616,648
Non-performing loans and leases		4,623			955
Allowance for credit losses to non-performing loans and leases		N/M	⁽¹⁾		N/M	⁽¹⁾
Net (charge-offs) to average loans and leases		(0.042	%)		(0.04	%)
Provision for credit losses to average loans and leases		0.07	%		0.07	%
Allowance for loan and lease losses to loans and leases held for investment		2.06	%		2.10	%

⁽¹⁾ Not meaningful (N/M)

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The following table indicates management’s allocation of the ACL for loans and leases by loan type as of each of the following dates:

	September 30, 2026								December 31, 2025
(Dollars in thousands)	Dollars		Percent of Each Loan Type to Total Loans			Percent of ACL to Each Loan Type			Dollars		Percent of Each Loan Type to Total Loans			Percent of ACL to Each Loan Type
Allowance for credit losses:
Real estate:
Commercial	$	22,492		41.51	%		1.44	%	$	22,574		40.37	%		1.52	%
Agricultural		22,924		18.39	%		3.31	%		23,647		19.24	%		3.35	%
Residential and home equity		7,687		10.78	%		1.90	%		7,620		11.05	%		1.88	%
Construction		1,921		2.59	%		1.97	%		2,311		3.50	%		1.80	%
Total real estate		55,024		73.27	%		2.00	%		56,152		74.16	%		2.06	%
Commercial & industrial		8,994		14.95	%		1.60	%		7,355		13.57	%		1.48	%
Agricultural		7,527		7.03	%		2.85	%		6,760		7.20	%		2.56	%
Commercial leases		5,551		4.65	%		3.17	%		5,861		4.94	%		3.24	%
Consumer and other		225		0.10	%		5.80	%		247		0.13	%		5.29	%
Total allowance for credit losses	$	77,321		100.00	%		2.06	%	$	76,375		100.00	%		2.08	%

Deposits

The following table shows the deposit balances as of the dates indicated:

(Dollars in thousands)	September 30, 2026		December 31, 2025
Deposits:
Non-interest bearing	$	1,559,117	$	1,642,119
Interest-bearing:
Demand		788,195		802,352
Savings and money market		1,869,697		1,790,274
Certificates of deposit		753,008		743,081
Total interest-bearing		3,410,900		3,335,707
Total deposits	$	4,970,017	$	4,977,826

Total deposits were $4.97 billion and $4.98 billion as of September 30, 2026 and December 31, 2025, respectively, a decrease of $7.8 million or 0.16%. The decrease was primarily due to a decrease in non- interest bearing demand accounts of $83.0 million, or 5.05%, and a decrease in interest bearing demand deposit accounts of $14.2 million, or 1.76%, from December 31, 2025 to September 30, 2026, respectively. These decreases were partially offset by an increase of $79.4 million, or 4.44%, in savings and money market accounts and an increase of $10.0 million, or 1.34%, in certificates of deposits from December 31, 2025 to September 30, 2026. Non-interest bearing deposits were 31.37% and 32.99% of total deposits at September 30, 2026 and December 31, 2025, respectively.

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The following table shows the average amount and average rate paid on the categories of deposits for each of the periods presented:

	Nine Months Ended September 30,
	2026							2025
(Dollars in thousands)	Average Balance		Interest Expense		Average Rate			Average Balance		Interest Expense		Average Rate
Total deposits:
Interest-bearing deposits:
Demand	$	791,001	$	2,021		0.34	%	$	878,917	$	4,267		0.65	%
Savings and money market		1,892,725		25,532		1.80	%		1,723,405		23,160		1.80	%
Certificates of deposit greater than $250,000		421,064		10,126		3.22	%		386,639		10,219		3.53	%
Certificates of deposit equal to or less than $250,000		342,560		7,031		2.74	%		331,959		7,139		2.88	%
Total interest-bearing deposits		3,447,350		44,710		1.73	%		3,320,920		44,785		1.80	%
Non-interest bearing deposits		1,565,238							1,505,088
Total deposits	$	5,012,588	$	44,710		1.19	%	$	4,826,008	$	44,785		1.24	%

Deposits are gathered from individuals and businesses in our market areas. The interest rates paid are competitively priced for each particular deposit product and structured to meet our funding requirements. The Company reduced interest rates during the last four months of 2025 after the Federal Reserve cut interest rates by 75 basis points between September and December 2025. The average cost of total deposits, including non-interest bearing deposits, decreased to 1.20% for the three months ended September 30, 2026, compared with 1.22% for the same period a year ago, and decreased to 1.19% for the nine months ended September 30, 2026, compared with 1.24% for the nine months ended September 30, 2025.

The following table shows deposits with a balance greater than $250,000 at September 30, 2026 and December 31, 2025:

(Dollars in thousands)	September 30, 2026		December 31, 2025
Non-Maturity Deposits greater than $250,000	$	2,686,082	$	2,729,456
Certificates of deposit greater than $250,000, by maturity:
Less than 3 months		206,524		137,517
3 months to 6 months		133,077		192,804
6 months to 12 months		68,387		67,313
More than 12 months		1,137		629
Total certificates of deposit greater than $250,000	$	409,125	$	398,263
Total deposits greater than $250,000	$	3,095,207	$	3,127,719

Refer to the “Average Balance and Yields” schedules located in this "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations" for information on separate deposit categories.

The Bank participates in a program wherein the State of California places time deposits with the Bank at the Bank’s option. As of September 30, 2026 and December 31, 2025 the Bank had $3.0 million of such deposits.

Total estimated uninsured deposits based on the Company’s regulatory reporting amounted to $2.5 billion at September 30, 2026 and December 31, 2025.

Federal Home Loan Bank Advances and Federal Reserve Bank Borrowings

Lines of Credit with the Federal Home Loan Bank and FRB are other key sources of funds to support earning assets and liquidity. These sources of funds are also used to manage the Company’s interest rate risk exposure and, as opportunities arise, to borrow and invest the proceeds at a positive spread through the investment portfolio. There were no FHLB advances at September 30, 2026 or December 31, 2025. There were no Federal Funds purchased or advances from the FRB at September 30, 2026 or December 31, 2025.

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Long-Term Subordinated Debentures

On December 17, 2003, the Company raised $10.0 million through the sale of subordinated debentures to an off-balance-sheet trust and its sale of trust-preferred securities. See Note 9. “Long-Term Subordinated Debentures” located in “Item 8. Financial Statements and Supplementary Data” in our 2025 Form 10-K. Although this amount is reflected as subordinated debt on the Company’s balance sheet, under current regulatory guidelines, our Trust Preferred Securities continue to qualify as regulatory capital.

These securities accrue interest at a variable rate based upon 3-month SOFR plus 2.85%. Interest rates reset quarterly and the rate was 7.09% at September 30, 2026 (the next reset is December 17, 2026). The average rate paid for these securities was 6.90% for the first nine months of 2026 and 7.52% for the first nine months of 2025. Additionally, if the Company decided to defer interest on the subordinated debentures, the Company would be prohibited by the terms of the debentures from paying cash dividends on the Company’s common stock.

Capital Resources

The Company relies primarily on capital generated through the retention of earnings to satisfy its capital requirements. The Company engages in an ongoing assessment of its capital needs in order to support business growth and to ensure depositor protection. Shareholders’ equity totaled $663.1 million at September 30, 2026, an increase of $17.6 million, or 2.72%, from $645.5 million at December 31, 2025, due primarily to net income of $73.9 million during the first nine months of 2026, partially offset by dividends of $11.0 million, stock repurchases of $7.0 million, and an increase in accumulated other comprehensive loss of $41.0 million.

The Company and the Bank are subject to various regulatory capital adequacy guidelines as outlined under Part 324 of the FDIC Rules and Regulations. Failure to meet minimum capital requirements can initiate certain mandatory, and possibly discretionary, actions by regulators that, if undertaken, could have a direct material effect on the Company’s and the Bank's financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the Company and the Bank's assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. The Company and the Bank's capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.

As of September 30, 2026, the Company was in compliance with all of these capital requirements and there were no restrictions on the Company’s business activity. As of September 30, 2026, the Bank met the requirements to be categorized as “well-capitalized” under the FDIC regulatory framework for prompt corrective action. To be categorized as “well-capitalized,” the Bank must maintain minimum Total risk-based, Tier 1 risk-based and Tier 1 leverage ratios as set forth in the following tables as of September 30, 2026 and December 31, 2025.

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The Company’s and Bank’s actual and required capital amounts and ratios were as follows at September 30, 2026 and December 31, 2025:

	September 30, 2026
	Actual					Required for Capital Adequacy Purposes					Minimum to be Categorized as "Well Capitalized" Under Prompt Corrective Action Regulation
(Dollars in thousands)	Amount		Ratio			Amount		Ratio			Amount		Ratio
Farmers & Merchants Bancorp
CET1 capital to risk-weighted assets	$	681,149		14.91	%	$	205,549		4.50	%		N/A		N/A
Tier 1 capital to risk-weighted assets		691,149		15.13	%		274,065		6.00	%		N/A		N/A
Risk-based capital to risk-weighted assets		748,542		16.39	%		365,420		8.00	%		N/A		N/A
Tier 1 leverage capital ratio		691,149		12.05	%		229,467		4.00	%		N/A		N/A

F & M Bank
CET1 capital to risk-weighted assets	$	688,708		15.08	%	$	205,496		4.50	%	$	296,827		6.50	%
Tier 1 capital to risk-weighted assets		688,708		15.08	%		273,995		6.00	%		365,326		8.00	%
Risk-based capital to risk-weighted assets		746,087		16.34	%		365,326		8.00	%		456,658		10.00	%
Tier 1 leverage capital ratio		688,708		12.02	%		229,175		4.00	%		286,469		5.00	%

	December 31, 2025
	Actual					Required for Capital Adequacy Purposes					Minimum to be Categorized as "Well Capitalized" Under Prompt Corrective Action Regulation
(Dollars in thousands)	Amount		Ratio			Amount		Ratio			Amount		Ratio
Farmers & Merchants Bancorp
CET1 capital to risk-weighted assets	$	620,134		13.81	%	$	202,001		4.50	%		N/A		N/A
Tier 1 capital to risk-weighted assets		630,134		14.04	%		269,334		6.00	%		N/A		N/A
Risk-based capital to risk-weighted assets		686,542		15.29	%		359,112		8.00	%		N/A		N/A
Tier 1 leverage capital ratio		630,134		11.00	%		229,189		4.00	%		N/A		N/A

F & M Bank
CET1 capital to risk-weighted assets	$	627,683		13.99	%	$	201,969		4.50	%	$	291,733		6.50	%
Tier 1 capital to risk-weighted assets		627,683		13.99	%		269,292		6.00	%		359,056		8.00	%
Risk-based capital to risk-weighted assets		684,082		15.24	%		359,056		8.00	%		448,820		10.00	%
Tier 1 leverage capital ratio		627,683		10.98	%		228,755		4.00	%		285,944		5.00	%

On September 10, 2024, the Board of Directors authorized a new share repurchase program (the “Repurchase Plan”) in which the Company may repurchase up to $55.0 million of the Company’s common stock, which represented approximately 9% of outstanding shareholders’ equity at the time of approval. On August 14, 2025, the Board of Directors authorized an increase of $45.0 million to the existing share repurchase program along with an extension of the program through December 31, 2027.

Repurchases by the Company under the Repurchase Plan may be made from time to time through open market purchases, trading plans established in accordance with SEC rules, privately negotiated transactions, or by other means. In August 2022, the Inflation Reduction Act of 2022 (“IRA”) was enacted. Among other things, the IRA imposes an excise tax equal to 1% of the fair market value of any stock repurchased by covered corporations during a taxable year, subject to certain limits and provisions.

During the first nine months of 2026, the Company repurchased 4,954 shares under the Repurchase Plan, for a total of $7.0 million, inclusive of the excise tax. As of September 30, 2026, there remained $23.4 million authorized for repurchases under the Repurchase Plan.

On August 13, 2025, the Company announced that it changed its dividend policy related to the frequency of cash dividend payments from semi-annually to quarterly. On August 11, 2026, the Company declared a quarterly cash dividend of $5.60 per share which was paid on October 1, 2026, to shareholders of record on September 11, 2026.

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Off-Balance-Sheet Arrangements

Off-balance-sheet arrangements are any contractual arrangement to which an unconsolidated entity is a party, under which the Company has: (1) any obligation under a guarantee contract; (2) a retained or contingent interest in assets transferred to an unconsolidated entity or similar arrangement that serves as credit, liquidity, or market risk support to that entity for such assets; (3) any obligation under certain derivative instruments; or (4) any obligation under a material variable interest held by us in an unconsolidated entity that provides financing, liquidity, market risk, or credit risk support to the Company, or engages in leasing, hedging, or research and development services with the Company.

The following table sets forth our off-balance-sheet lending commitments as of September 30, 2026:

			Amount of Commitment Expiration per Period
(Dollars in thousands)	Total Committed Amount		Less than One Year		One to Three Years		Three to Five Years		After Five Years
Off-balance sheet commitments
Commitments to extend credit	$	1,064,327	$	452,795	$	387,590	$	66,347	$	157,595
Standby letters of credit		21,367		17,459		2,908		1,000		-
Total off-balance sheet commitments	$	1,085,694	$	470,254	$	390,498	$	67,347	$	157,595

The Company's exposure to credit loss in the event of nonperformance by the other party with regard to standby letters of credit, undisbursed loan commitments, and financial guarantees is represented by the contractual notional amount of those instruments. Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. The Company uses the same credit policies in making commitments and conditional obligations as it does for recorded balance sheet items. The Company may or may not require collateral or other security to support financial instruments with credit risk. Evaluations of each customer's creditworthiness are performed on a case-by-case basis. Additionally, the Company maintains an allowance for credit losses for unfunded loan commitments, which totaled $3.3 million at September 30, 2026 and December 31, 2025.

Liquidity

The ability to have readily available funds sufficient to repay maturing and non-maturing liabilities is of primary importance to depositors, creditors and regulators. In an effort to satisfy our liquidity needs, we actively manage our assets and liabilities. We have access to immediate liquid resources in the form of cash, which totaled $172.0 million, or 3.0% of total assets, as of September 30, 2026. The majority of cash is on deposit with the FRB and amounted to $110.6 million at September 30, 2026. Potential sources of liquidity also include our ability to sell or pledge our available-for-sale securities portfolio, our ability to pledge for borrowing purposes our held-to-maturity portfolio, our ability to sell loans in the secondary market, and our ability to borrow from the FRB and FHLB. Our diversified deposit portfolio has historically provided us with a long-term source of stable low-cost funding. Maturities and payments on outstanding loans and investment securities also provide a steady flow of funds. Our liquidity, represented by cash borrowing lines, federal funds and available-for-sale securities, is a result of our operating, investing and financing activities and related cash flows. In order to ensure funds are available at all times, we devote resources to projecting the amount of funds that will be required and we maintain relationships with a diversified client base. Liquidity requirements can also be met through short-term borrowings or the disposition of short-term assets. We actively monitor our liquidity on a daily basis and manage our liquidity and overall balance sheet positions through both our management and Board-level Asset and Liability Management committees (“ALCO”), which meet regularly during the year.

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We had the following borrowing lines available at September 30, 2026:

(Dollars in thousands)	Total Credit Line Limit		Outstanding Amount		Remaining Credit Line Available		Value of Collateral Pledged
Additional liquidity sources:
Federal Reserve BIC	$	1,048,779	$	-	$	1,048,779	$	1,315,479
Federal Home Loan Bank		905,725		-		905,725		1,169,685
US Bank Fed Funds		65,000		-		65,000		-
PCBB Fed Funds		50,000		-		50,000		-
FHLB Fed Funds		18,000		-		18,000		-
Total additional liquidity sources	$	2,087,504	$	-	$	2,087,504	$	2,485,164

We continued our focus on maintaining a strong liquidity position throughout the first nine months of 2026, and we believe our liquid assets and short-term borrowing credit lines are adequate to meet our cash flow needs for loan and lease funding and deposit cash withdrawals for the foreseeable future. As of September 30, 2026, we had $1.0 billion in internal sources of liquidity comprised of $172.0 million in cash and $800.6 million of unencumbered investment securities, which represented in the aggregate 17.1% of total assets as of such date. We also had $2.1 billion in external sources of liquidity as outlined in the table above, bringing our total available liquidity to $3.1 billion at September 30, 2026. Our pledged collateral on short-term borrowing lines is comprised of $2.5 billion in loans and $1.1 million in investment securities held at market value at September 30, 2026. We have the option of either borrowing on our credit lines or selling these investment securities for cash flow needs.

On a long-term basis, we can, as needed, meet our liquidity needs by changing the relative distribution of our asset portfolios by reducing our investment or loan and lease volumes, or selling or encumbering assets. Further, we can increase liquidity by soliciting higher levels of deposit accounts through promotional activities and/or borrowing from our correspondent banks as well as the Federal Reserve and FHLB. At the current time, our long-term liquidity needs primarily relate to funds required to support loan and lease originations and commitments and deposit withdrawals.

We believe we can meet all of these needs from existing liquidity sources. Our liquidity is comprised of three primary classifications: cash flows from or used in operating activities; cash flows from or used in investing activities; and cash flows from or used in financing activities. Net cash provided by or used in operating activities has consisted primarily of net income adjusted for certain non-cash income and expense items such as the credit loss provision, investment and other amortization and depreciation. Our net cash provided by operating activities for the first nine months of 2026 was $114.1 million, driven by net income of $73.9 million.

Our primary investing activities are the origination of loans and leases and purchases and sales of investment securities. Net cash used in investing activities was $49.6 million during the first nine months of 2026, driven by a net increase in purchases in our investment portfolio of $84.0 million, a net increase in loans and leases of $102.7 million, offset by proceeds from the sale of OREO of $5.8 million, and a $14.3 million increase of premises and equipment, offset by $152.0 million in proceeds from maturities, calls, and pay downs of investment securities.

Net cash used in financing activities totaled $37.5 million in the first nine months of 2026, driven by $10.8 million in cash dividends paid to shareholders and restricted stock vesting distributions of $11.8 million.

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Item 3.

Quantitative and Qualitative Disclosures About Market Risk

The Company’s assessment of market risk at September 30, 2026 indicates there have been no material changes in the quantitative and qualitative disclosures from those made in the Company’s 2025 Form 10-K.

Market risk is the risk of loss in a financial instrument arising from adverse changes in market prices and rates, foreign currency exchange rates, commodity prices and equity prices. Our market risk arises primarily from interest rate risk inherent in our lending and deposit taking activities. Management actively monitors and manages our interest rate risk exposure. We do not have any market-risk sensitive instruments entered into for trading purposes. In monitoring interest rate risk, we continually analyze and manage our earning assets and funding liabilities based on their payment streams and interest rates, the timing of their maturities and/or prepayments, and their sensitivity to actual or potential changes in market interest rates.

Management uses various asset/liability strategies to manage the re-pricing characteristics of our assets and liabilities designed to ensure that exposure to interest rate fluctuations is limited within our guidelines of acceptable levels of risk-taking. Hedging strategies, including the terms and pricing of loans and deposits, and managing the deployment of our securities, are considered to reduce mismatches in interest rate re-pricing opportunities of portfolio assets and their funding sources.

Since our earnings are primarily dependent on our ability to generate net interest income, we focus on actively monitoring and managing the effects of adverse changes in interest rates on our net interest income. Our Asset Liability Management Committee (“ALCO”), which is comprised of members of the Board of Directors and Executive Officers, manages market risk. ALCO monitors interest rate risk by analyzing the potential impact on net interest income from potential changes in interest rates, and considers the impact of alternative strategies or changes in balance sheet structure. ALCO manages our balance sheet in part to maintain the potential impact of changes in interest rates on net interest income within acceptable ranges despite changes in interest rates. ALCO and management utilize a third party to assist with asset liability management including the use of simulation models.

Our exposure to interest rate risk is reviewed on at least a quarterly basis by ALCO. Interest rate risk exposure is measured using interest rate sensitivity analysis to determine our change in net interest income in the event of hypothetical changes in interest rates. If potential changes to net interest income resulting from hypothetical interest rate changes are not within risk tolerances determined by ALCO, and approved by the full Board of Directors, Management may make adjustments to the Company’s asset and liability mix to bring interest rate risk levels within the Board approved limits.

Net Interest Income Simulation. In order to measure interest rate risk, we use a simulation model to project changes in net interest income that result from forecasted changes in interest rates. This analysis calculates the difference between net interest income forecasted using a rising and a falling interest rate scenario and a net interest income forecast using a base market interest rate derived from the current Treasury yield curve. The income simulation model includes various assumptions regarding the re-pricing relationships for each of our products. Many of our assets are floating rate loans, which are assumed to re-price immediately, and to the same extent as the change in market rates according to their contracted index.

Some loans and investment vehicles include the opportunity of prepayment (embedded options), and accordingly the simulation model uses various proprietary models to estimate these prepayments and assumes the reinvestment of the proceeds at current yields. Our non-term deposit products generally re-price more slowly, usually changing less than the change in market rates and at our discretion.

This analysis indicates the impact of changes in net interest income for the given set of rate changes and assumptions. It assumes the balance sheet size remains static throughout the simulation horizon by replacing existing cash flows/amortization into similar products at current rates to try and capture the ongoing activity of the balance sheet without forecasting any level of growth. It does not account for all factors that affect this analysis, including changes by management to mitigate the effect of interest rate changes or secondary impacts such as changes to our credit risk profile as interest rates change.

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Furthermore, loan prepayment-rate estimates and spread relationships change regularly. Interest rate changes create changes in actual loan prepayment rates that will differ from the market estimates incorporated in this analysis. Changes that vary significantly from the assumptions may have significant effects on our net interest income.

For the rising and falling interest rate scenarios, the base market interest rate forecast was increased or decreased, on an instantaneous and sustained basis, by 100, 200 and 300 basis points. We then evaluate the simulation results using two approaches: Net Interest Income at Risk (“NII at Risk”) and Economic Value of Equity (“EVE”). Under NII at Risk, the impact on net interest income from the changes in interest rates on interest earning assets and interest-bearing liabilities is modeled using various assumptions of assets and liabilities. EVE measures the period-end present value of assets minus the present value of liabilities. Management uses this value to measure the changes in the economic value of the Company under various interest rate scenarios.

Based on our quarterly simulations, our net interest margin exposure related to these hypothetical changes in market interest rates was within the current guidelines established by ALCO. The Company is liability sensitive, as interest-bearing liabilities reprice more quickly than interest-bearing assets. As a result, in rising interest rate scenarios net interest income declines while in falling interest rate scenarios net interest income increases.

The ratio of variable to fixed-rate loans in our loan portfolio, the ratio of short-term (maturing at a given time within 12 months) to long-term loans, and the ratio of our demand, money market and savings deposits to CDs (and their time periods), are the primary factors affecting the sensitivity of our net interest income to changes in market interest rates. Our short-term loans are typically priced at prime plus a margin, and our long-term loans are typically priced based on a specific term of the Treasury Curve for comparable maturities, plus a margin. The composition of our rate-sensitive assets or liabilities is subject to change and could result in a more unbalanced position that would cause market rate changes to have a greater impact on our net interest margin. As of September 30, 2026, our loan and lease portfolio was comprised of 53.91% fixed rate and 46.09% variable rate loans. An additional component of managing our interest rate risk is the use of loan floors when structuring our variable loan products. At loan origination, a loan floor rate, typically equal to or slightly below the initial rate on the loan, is established. This is particularly beneficial in a declining interest rate environment.

The following table presents the projected change in the Company’s net interest income over the next twelve months and the economic value of equity at September 30, 2026, that would occur upon an immediate change in interest rates based on the models discussed above, but without giving effect to any steps that management might take to counteract such change:

	Estimated Change in Net Interest Income (NII) (as a % of NII)			Estimated Change in Economic Value of Equity (EVE) (as a % of EVE)

+300 bps		(1.7	%)		(9.2	%)
+200 bps		(1.4	%)		(6.1	%)
+100 bps		(0.7	%)		(2.5	%)
0 bps		-			-
-100 bps		1.3	%		1.4	%
-200 bps		2.2	%		0.7	%
-300 bps		2.1	%		(2.1	%)

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Item 4.

Controls and Procedures

Evaluation of Disclosure Controls and Procedures

An evaluation was carried out under the supervision and with the participation of the Company’s management, including the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), of the effectiveness of the disclosure controls and procedures (as required by Exchange Act Rules 240.13a-15(b) and 15d-15(b)). Based on that evaluation, the CEO and CFO have concluded that as of the end of the period covered by this Report, the disclosure controls and procedures are effective to provide reasonable assurance that the information required to be disclosed by the Company in reports that are filed or submitted under the Exchange Act are recorded, processed, summarized and timely reported as provided in the SEC’s rules and forms.

Changes in Internal Control Over Financial Reporting

There have been no material changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended September 30, 2026, to which this report relates that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1.

Legal Proceedings

Certain lawsuits and claims arising in the ordinary course of business may be filed or pending against the Company or its subsidiaries. Based upon information available to the Company, its review of such lawsuits and claims and consultation with its counsel, the Company believes the liability relating to these actions, if any, would not have a material adverse effect on its consolidated financial statements. There are no material proceedings adverse to the Company to which any director, officer or affiliate of the Company is a party.

Item 1A.

Risk Factors

We are subject to various risks and uncertainties, which could materially affect our business, results of operations, financial condition, future results, and the trading price of our common stock. There have been no material changes to the risk factors previously disclosed in Part I, Item 1A, “Risk Factors” in our 2025 Form 10-K. These risk factors, as well as our condensed consolidated financial statements and notes thereto and the other information appearing in this Report, should be reviewed carefully for important information regarding risks that affect us.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

The following table reports information regarding repurchases of our common stock during the three months ended September 30, 2026:

Period	Total number of shares purchased		Average price paid per share⁽¹⁾		Total number of shares purchased as part of publicly announced plans or programs		Maximum number (or approximate dollar value) of shares that may yet be purchased under the plans or programs (In thousands)

July 1, 2026 to July 31, 2026		-	$	-		-	$	30,031
August 1, 2026 to August 31, 2026		73		1,338.23		73		29,934
September 1, 2026 to September 30, 2026		4,641		1,415.60		4,641		23,364
Total 3rd Quarter 2026		4,714	$	1,414.40		4,714	$	23,364

⁽¹⁾The aggregate purchase price and weighted average price per share does not include the effect of excise tax expense incurred on net stock repurchases. For the three months ended September 30, 2026, excise tax expense totaled $67,000.

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On September 10, 2024, the Board of Directors authorized a new share repurchase program (the “Repurchase Plan”) in which the Company may purchase up to $55.0 million of the Company’s common stock, which represented approximately 9% of outstanding shareholders’ equity at the time of approval. On August 14, 2025, the Board of Directors authorized an increase of $45.0 million to the existing share repurchase program along with an extension of the program through December 31, 2027.

Item 3.

Defaults Upon Senior Securities

Not Applicable

Item 4.

Mine Safety Disclosures

Not Applicable

Item 5.

Other Information

During the three months ended September 30, 2026, no director or officer (as defined in Rule 16a-1(f) under the Exchange Act) of the Company adopted, modified, or terminated a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement” as each term is defined in Item 408(a) of Regulation S-K.

Item 6.

Exhibits

Exhibit

Number	Description
31(a)	Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31(b)	Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32	Certification of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101	Interactive data files pursuant to Rule 405 of Regulation S-T: (i) the Unaudited Consolidated Balance Sheets, (ii) the Unaudited Consolidated Statements of Income, (iii) the Unaudited Consolidated Statements of Comprehensive Income, (iv) the Unaudited Consolidated Statements of Changes in Shareholders’ Equity, (v) the Unaudited Consolidated Statements of Cash Flows and (vi) the Notes to the Unaudited Consolidated Financial Statements. The XBRL instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
104	Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	FARMERS & MERCHANTS BANCORP

Date: November 6, 2026	/s/ Kent A. Steinwert
	Kent A. Steinwert
	Director, Chairman, President and Chief Executive Officer (Principal Executive Officer)


Date: November 6, 2026	/s/ Bart R. Olson
	Bart R. Olson
	Executive Vice President and Chief Financial Officer (Principal Financial Officer)

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Source: View Original Filing on SEC EDGAR

Farmers & Merchants Bancorp Q3 profit rises to $25.1M

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