UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                           --------------------------
                                   FORM 10-K
                           --------------------------
              [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                      THE SECURITIES EXCHANGE ACT OF 1934

                  For the fiscal year ended December 31, 2005

                                       OR

          [ ] 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                   (I.R.S.  Employer
 of incorporation or organization)               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: NONE

Securities registered pursuant to Section 12(g) of the Act:  COMMON STOCK, $0.01
                                                             PAR VALUE PER SHARE

Indicate by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act.
                                                              Yes [ ]     No [X]

Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Act.
                                                              Yes [ ]     No [X]


Note - Checking the box above will not relieve any registrant required to file
reports pursuant to Section 13 or 15(d) of the Exchange Act from their
obligations under those Sections.

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  [X]     No  [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.  [ ]

Indicate  by  check mark whether the registrant is a large accelerated filer, an
accelerated  filer,  or  a non-accelerated filer. See definition of "accelerated
filer  and  large  accelerated  filer"  in Rule 12b-2 of the Exchange Act (Check
one):
Large accelerated filer [ ]   Accelerated Filer [X]    Non-accelerated filer [ ]

Indicate  by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Act)    Yes  [ ]    No  [X]


                                        1
<PAGE>
The  aggregate  market  value  of  the  Registrant's  common  stock  held  by
non-affiliates  on  June  30, 2005 (based on the last reported trade on June 23,
2005)  was  $414,793,500

The  number  of  shares  of  Common  Stock  outstanding as of February 28, 2006:
821,600

Documents Incorporated by Reference:
Portions of the Annual Report to Shareholders for fiscal year ended December 31,
2005 are incorporated by reference in Part I, Item 1 and Part II, Items 5
through 8 and 9A. Portions of the definitive Proxy Statement for the 2006 Annual
Meeting of Shareholders to be filed with the Securities and Exchange Commission
pursuant to Regulation 14A are incorporated by reference in Part III, Items 10
through 14.


                                        2
<PAGE>
<TABLE>
<CAPTION>
                             FARMERS & MERCHANTS BANCORP
                                      FORM 10-K
                                  TABLE OF CONTENTS
                                  -----------------


PART I                                                                           PAGE
------                                                                           ----
<S>                                                                              <C>
     Introduction                                                                   5

     Item  1.     Business                                                          5

     Item 1A.     Risk Factors                                                     21

     Item 1B.     Unresolved Staff Comments                                        26

     Item  2.     Properties                                                       26

     Item  3.     Legal Proceedings                                                26

     Item  4.     Submission of Matters to a Vote of Security Holders              26

PART II
-------

     Item  5.     Market for the Registrant's Common Equity, Related
                  Stockholder Matters and Issuer Purchases of Equity Securities    26

     Item  6.     Selected Financial Data                                          28

     Item  7.     Management's Discussion and Analysis of Financial
                  Condition and Results of Operations                              28

     Item 7A.     Quantitative and Qualitative Disclosures About Market Risk       28

     Item  8.     Financial Statements and Supplementary Data                      28

     Item  9.     Changes in and Disagreements with Accountants on
                  Accounting and Financial Disclosure                              29

     Item 9A.     Controls and Procedures                                          29

     Item 9B.     Other Information                                                29


                                        3
<PAGE>
PART III
--------

     Item 10.     Directors and Executive Officers of the Company                  29

     Item 11.     Executive Compensation                                           29

     Item 12.     Security Ownership of Certain Beneficial
                  Owners and Management and Related Stockholder Matters            29

     Item 13.     Certain Relationships and Related Transactions                   29

     Item 14.     Principal Accountant Fees and Services                           30

PART IV
-------

     Item 15.     Exhibits and Financial Statement Schedules                       30

Signatures                                                                         31

Index to Exhibits                                                                  32
</TABLE>


                                        4
<PAGE>
INTRODUCTION - FORWARD LOOKING STATEMENTS
This Form 10-K contains various forward-looking statements, usually containing
the words "estimate," "project," "expect," "objective," "goal," or similar
expressions and includes assumptions concerning the Company's operations, future
results, and prospects.  These forward-looking statements are based upon current
expectations and are subject to risk and uncertainties.  In connection with the
"safe-harbor" provisions of the Private Securities Litigation Reform Act of
1995, the Company provides the following cautionary statement identifying
important factors which could cause the actual results of events to differ
materially from those set forth in or implied by the forward-looking statements
and related assumptions.

Such factors include the following: (i) the effect of changing regional and
national economic conditions; (ii) significant changes in interest rates and
prepayment speeds; (iii) credit risks of commercial, agricultural, real estate,
consumer, and other lending activities; (iv) changes in federal and state
banking laws or regulations; (v) competitive pressure in the banking industry;
(vi) changes in governmental fiscal or monetary policies; (vii) uncertainty
regarding the economic outlook resulting from the continuing war on terrorism,
as well as actions taken or to be taken by the U.S. or other governments as a
result of further acts or threats of terrorism; and (viii) other factors
discussed in Item 1A - Risk Factors.

Readers are cautioned not to place undue reliance on these forward-looking
statements which speak only as of the date hereof.  The Company undertakes no
obligation to update any forward-looking statements to reflect events or
circumstances arising after the date on which they are made.

PART I

ITEM  1.  BUSINESS

General Development of the Business
August 1, 1916 marked the first day of business for Farmers & Merchants Bank of
Lodi. The Bank was incorporated under the laws of the State of California and
was licensed by the California Department of Financial Institutions as a
state-chartered bank.  The Bank prospered and grew even through the Depression
years.  Farmers & Merchants' first venture out of Lodi occurred in response to
the closure of the only bank serving the community of Galt, requiring area
residents to drive miles away for the simplest banking transaction.  To meet
this need, the Galt office was opened in 1948.  Shortly thereafter branches were
opened in Linden, North Modesto and South Sacramento.  On April 12, 1957, the
Bank's name was changed to Farmers & Merchants Bank of Central California.

The Bank continued expansion in the Lodi market area and also acquired three
offices in Turlock and Hilmar in 1985.  The service area was next expanded by
opening a loan production office in the community of Elk Grove.  This office was
later converted to a full service branch.  A third office was also opened in
Modesto. The year 2002 saw the opening of the Lincoln Center office, the
Company's first branch in the city of Stockton. In September, 2003 the Bank
opened its fourth office in Modesto.  Located across from the Vintage Faire
Mall, this branch incorporates state of the art technology throughout and
represents the template for the Bank's future branch expansions and renovations.

During 2004 the Company initiated a major branch expansion, relocation and
renovation program.  This program continued into 2005 with the opening of a
second Galt office in June and a new full-service branch in downtown Sacramento
in February 2006. Other new branches will be opened during 2006 in Lodi and
Stockton and the downtown Turlock branch will be relocated to a new facility.
During 2005 renovations were completed at many branches, both to update these
facilities and comply with the Americans with Disabilities Act.  The Company
currently estimates that the capital expenditures associated with this
multi-year program will be in excess of $10 million, which will result in an
increase in the Company's occupancy and equipment expenses.


                                        5
<PAGE>
On March 10, 1999, Farmers & Merchants Bancorp (together with its subsidiaries,
the "Company"), pursuant to a reorganization, acquired all of the voting stock
of Farmers & Merchants Bank of Central California (the "Bank").  Farmers &
Merchants Bancorp is a bank holding company incorporated in the State of
Delaware, and registered under the Bank Holding Company Act of 1956, as amended.
The Company's outstanding securities as of December 31, 2005 consisted of
823,651 shares of common stock, $0.01 par value and no shares of preferred stock
issued.  The Bank is the Company's principal asset.

The Bank's two wholly owned subsidiaries are Farmers & Merchants Investment
Corporation and Farmers/Merchants Corp.  Farmers & Merchants Investment
Corporation is currently dormant and Farmers/Merchants Corp. acts as trustee on
deeds of trust originated by the Bank.

F & M Bancorp, Inc. was created in March 2002 to protect the name "F & M Bank".
During 2002, the Company completed a fictitious name filing in California to
begin using the streamlined name, "F & M Bank" as part of a larger effort to
enhance the Company's image and build brand name recognition.  Since 2002, the
Company has converted most of its daily operating and image advertising to the
"F & M Bank" name and the Company's logo, slogan and signage were redesigned to
incorporate the trade name, "F & M Bank".

During 2003 the Company formed a wholly owned Connecticut statutory business
trust, FMCB Statutory Trust I, for the sole purpose of issuing trust preferred
securities.  See Note 19 of Notes to Consolidated Financial Statements.

The Company's principal business is to serve as a holding company for the Bank
and for other banking or banking related subsidiaries which the Company may
establish or acquire.  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 advanced 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.  See Item 1. Business - Dividends and Other Transfer
of Funds.

The Bank's deposit accounts are insured under the Federal Deposit Insurance Act
up to applicable limits.

As a bank holding company, the Company is subject to regulation and examination
by the Board of Governors of the Federal Reserve System ("FRB"). The Bank is a
California state-chartered non-fed member bank subject to the regulation and
examination of the California Department of Financial Institutions.  Since
August 1, 1940, the Bank had also been a member of the Federal Reserve System
and the FRB served as its primary Federal regulator.  However, at a meeting of
the Board of Directors of the Bank on April 5, 2005, the Board decided to
withdraw from membership in the Federal Reserve System.  The Bank received the
FRB's approval for this action on April 18, 2005.  As a result, the Bank's
primary federal regulator is now the Federal Deposit Insurance Corporation. The
FRB will continue to regulate and examine the Company but not the Bank.
Management and the Board believe that this change will not have any operating or
financial impact on the Company or the Bank.

Service  Area
The Company services the northern Central Valley of California with 19 banking
offices. The area includes Sacramento, San Joaquin, Stanislaus and Merced
Counties with branches in Sacramento, Elk Grove, Galt, Lodi, Stockton, Linden,
Modesto, Turlock and Hilmar.

Through its network of banking offices, the Company emphasizes personalized
service along with a full range of banking services to businesses and
individuals located in the service areas of its offices.  Although the Company
focuses on marketing its services to small and medium sized businesses, a full
range of retail banking services are made available to the local consumer
market.


                                        6
<PAGE>
The Company offers a wide range of deposit instruments.  These include checking,
savings, money market, time certificates of deposit, individual retirement
accounts and online banking services for both business and personal accounts.
The Company also serves as a federal tax depository for its business customers.

The Company provides a full complement of lending products, including
commercial, real estate construction, agribusiness, installment, credit card and
real estate loans.  Commercial products include lines of credit and other
working capital financing and letters of credit.  Financing products for
individuals include automobile financing, lines of credit, residential real
estate, home improvement and home equity lines of credit.

The Company also offers a wide range of specialized services designed for the
needs of its commercial accounts. These services include a credit card program
for merchants, collection services, lockbox, investment sweep, on-line account
access, and electronic funds transfers by way of domestic and international wire
and automated clearinghouse.

The Company makes available investment products to customers, including mutual
funds and annuities.  These investment products are offered through a third
party, which employs investment advisors to meet with and provide investment
advice to the Company's customers.

Employees
At December 31, 2005, the Company employed a total of 294 full time equivalent
employees.  The Company believes that its employee relations are satisfactory.

Competition
The banking and financial services industry in California generally, and in the
Company's market areas specifically, is highly competitive.  The increasingly
competitive environment is a result primarily of changes in regulation, changes
in technology and product delivery systems, and the accelerating pace of
consolidation among financial service providers. The Company competes with other
major commercial banks, diversified financial institutions, credit unions,
savings and loan associations, money market and other mutual funds, mortgage
companies, and a variety of other non-banking financial services and advisory
companies.   Federal legislation encourages competition between different types
of financial service providers and has fostered new entrants into the financial
services market, and it is anticipated that this trend will continue. Using the
financial holding company structure, insurance companies and securities firms
may compete more directly with banks and bank holding companies.

Many of our competitors are much larger in total assets and capitalization, have
greater access to capital markets and offer a broader range of financial
services than the Company.  In order to compete with other financial service
providers, the Company relies upon personal contact by its officers, directors,
employees, and shareholders, along with various promotional activities and
specialized services.  In those instances where the Company is unable to
accommodate a customer's needs, the Company may arrange for those services to be
provided through its correspondents.

Government  Policies
The Company's profitability, like most financial institutions, is primarily
dependent on interest rate differentials. The difference between the interest
rates paid by the Company on interest-bearing liabilities, such as deposits and
other borrowings, and the interest rates received by the Company on its
interest-earning assets, such as loans extended to its customers and securities
held in its investment portfolio, comprise the major portion of the Company's
earnings. These rates are highly sensitive to many factors that are beyond the
control of the Company and the Bank, such as inflation, recession and
unemployment, and the impact which future changes in economic conditions might
have on the Company and the Bank cannot be predicted.


                                        7
<PAGE>
The business of the Company is also influenced by the monetary and fiscal
policies of the federal government and the policies of regulatory agencies,
particularly the Board of Governors of the Federal Reserve System (the "FRB").
The FRB implements national monetary policies (with objectives such as curbing
inflation and combating recession) through its open-market operations in U.S.
Government securities by adjusting the required level of reserves for depository
institutions subject to its reserve requirements, and by varying the target
federal funds and discount rates applicable to borrowings by depository
institutions. The actions of the FRB in these areas influence the growth of bank
loans, investments, and deposits and also affect interest rates earned on
interest-earning assets and paid on interest-bearing liabilities. The nature and
impact on the Company of any future changes in monetary and fiscal policies
cannot be predicted.

From time to time, legislative acts, as well as regulations, are enacted which
have the effect of increasing the cost of doing business, limiting or expanding
permissible activities, or affecting the competitive balance between banks and
other financial services providers. Proposals to change the laws and regulations
governing the operations and taxation of banks, bank holding companies, and
other financial institutions and financial services providers are frequently
made in the U.S. Congress, in the state legislatures, and before various
regulatory agencies. This legislation may change banking statues and the
operating environment of the Company and its subsidiaries in substantial and
unpredictable ways. If enacted, such legislation could increase or decrease the
cost of doing business, limit or expand permissible activities or affect the
competitive balance among banks, savings associations, credit unions, and other
financial institutions. The Company cannot predict whether any of this potential
legislation will be enacted, and if enacted, the effect that it, or any
implementing regulations, would have on the financial condition or results of
operations of the Company or any of its subsidiaries. See Item 1. Business -
Supervision and Regulation, below.

Supervision  and  Regulation
General
Bank holding companies and banks are extensively regulated under both federal
and state law.  The regulation is intended primarily for the protection of
depositors and the deposit insurance fund and not for the benefit of
shareholders of the Company.  Set forth below is a summary description of the
material laws and regulations, which relate to the operations of the Company and
the Bank.  This description does not purport to be complete and is qualified in
its entirety by reference to the applicable laws and regulations.

In recent years significant legislative proposals and reforms affecting the
financial services industry have been discussed and evaluated by Congress, the
state legislature and before the various bank regulatory agencies.  These
proposals may increase or decrease the cost of doing business, limiting or
expanding permissible activities, or enhance the competitive position of other
financial service providers.  The likelihood and timing of any such proposals or
bills and the impact they might have on the Company and its subsidiaries cannot
be predicted.

The  Company
The Company is a registered bank holding company and is subject to regulation
under the Bank Holding Company Act of 1956 ("BHCA"), as amended.  Accordingly,
the Company's operations are subject to extensive regulation and examination by
the FRB.  The Company is required to file with the FRB quarterly and annual
reports and such additional information as the FRB may require pursuant to the
Bank Holding Company Act.  The FRB conducts periodic examinations of the
Company.

The FRB may require that the Company terminate an activity or terminate control
of or liquidate or divest certain subsidiaries of affiliates when the FRB
believes the activity or the control of the subsidiary or affiliate constitutes
a significant risk to the financial safety, soundness or stability of any of its
banking subsidiaries.  The FRB also has the authority to regulate provisions of
certain bank holding company debt, including authority to impose interest
ceilings and reserve requirements on such debt.  Under certain circumstances,
the Company must file written notice and obtain approval from the FRB prior to
purchasing or redeeming its equity securities.


                                        8
<PAGE>
Under the BHCA and regulations adopted by the FRB, a bank holding company and
its non-banking subsidiaries are prohibited from requiring certain tie-in
arrangements in connection with an extension of credit, lease or sale of
property or furnishing of services.  For example, with certain exceptions, a
bank may not condition an extension of credit on a promise by its customer to
obtain other services provided by it, its holding company or other subsidiaries,
or on a promise by its customer not to obtain other services from a competitor.
In addition, federal law imposes certain restrictions on transactions between
Farmers & Merchants Bancorp and its subsidiaries.  Further, the Company is
required by the FRB to maintain certain levels of capital.  See Item 1. Business
- Supervision and Regulation - Capital Standards.

Directors, officers and principal shareholders of the Company, and the companies
with which they are associated, have had and will continue to have banking
transactions with the Bank in the ordinary course of business.  All such
extensions of credit are made on substantially the same terms (including
interest rates and collateral) as, and following credit-underwriting procedures
that are not less stringent than, those prevailing at the time for comparable
transactions by the Bank with other persons not covered by 12 USC 215.1 et seq.
and who are not employed by the Bank, and does not involve more than the normal
risk of repayment or present other unfavorable features. Extensions of credit to
insiders have been and may be made pursuant to a benefit or compensation program
that is widely available to employees of the Bank and that does not give
preference to any insider of the Bank over other employees.

The Company is prohibited by the BHCA, except in certain statutorily prescribed
instances, from acquiring direct or indirect ownership or control of more than
5% of the outstanding voting shares of any company that is not a bank or bank
holding company and from engaging directly or indirectly in activities other
than those of banking, managing or controlling banks or furnishing services to
its subsidiaries.  However, the Company, subject to the prior approval of the
FRB, may engage in any, or acquire shares of companies engaged in, activities
that are deemed by the FRB to be so closely related to banking or managing or
controlling banks as to be a proper incident thereto.

Under FRB regulations, a bank holding company is required to serve as a source
of financial and managerial strength to its subsidiary banks and may not conduct
its operations in an unsafe or unsound manner.  In addition, it is the FRB's
policy that in serving as a source of strength to its subsidiary banks, a bank
holding company should stand ready to use available resources to provide
adequate capital funds to its subsidiary banks during periods of financial
stress or adversity and should maintain the financial flexibility and
capital-raising capacity to obtain additional resources for assisting its
subsidiary banks. This support may be required at times when a bank holding
company may not be able to provide such support.  A bank holding company's
failure to meet its obligations to serve as a source of strength to its
subsidiary banks will generally be considered by the FRB to be an unsafe and
unsound banking practice or a violation of the FRB's regulations or both.

The  Gramm-Leach-Bliley Act of 1999 ("GLBA") eliminated many of the restrictions
placed on the activities of bank holding companies that become financial holding
companies. Among other things, GLBA  repealed  certain  Glass-Steagall  Act
restrictions on affiliations between banks and securities firms, and amended the
BHCA  to  permit  bank holding companies that are financial holding companies to
engage  in  activities,  and  acquire companies engaged in activities, that are:
financial  in  nature (including insurance underwriting, insurance company
portfolio  investment,  financial advisory, securities underwriting, dealing and
market-making, and  merchant  banking  activities);  incidental  to  financial
activities;  or complementary to financial activities if the FRB determines that
they  pose  no  substantial risk  to the  safety  or soundness  of depository
institutions  or  the  financial system in general. The Company has not become a
financial holding  company.GLBA  also  permits  national  banks  to  engage  in
activities  considered financial  in nature  through a  financial subsidiary,
subject  to  certain  conditions  and  limitations.


                                        9
<PAGE>
The Company's securities are registered with the Securities and Exchange
Commission under the Securities Exchange Act of 1934, as amended (the "Exchange
Act").  As such, the Company is subject to the information, proxy solicitation,
insider trading and other requirements and restrictions of the Exchange Act.


The  Bank
The Bank, as a California chartered non-member bank, is subject to primary
supervision, periodic examination and regulation by the California Department of
Financial Institutions ("DFI") and the Federal Deposit Insurance Corporation
("FDIC"). If, as a result of an examination of the Bank, the FDIC should
determine that the financial condition, capital resources, asset quality,
earnings prospects, management, liquidity, or other aspects of the Bank's
operations are unsatisfactory or that the Bank or its management is violating or
has violated any law or regulation, various remedies are available to the FDIC.
Such remedies include the power to enjoin "unsafe or unsound" practices, to
require affirmative action to correct any conditions resulting from any
violation or practice, to issue an administrative order that can be judicially
enforced, to direct an increase in capital, to restrict the growth of the Bank,
to assess civil monetary penalties, to remove officers and directors and
ultimately to terminate the Bank's deposit insurance, which for a California
chartered bank would result in a revocation of the Bank's charter. The DFI has
many of the same remedial powers.

Various requirements and restrictions under the laws of the State of California
and the United States affect the operations of the Bank.  State and federal
statues and regulations relate to many aspects of the Bank's operations,
including reserves against deposits, ownership of deposit accounts, interest
rates payable on deposits, loans, investments, mergers and acquisitions,
borrowings, dividends, locations of branch offices, and capital requirements.
Further, the Bank is required to maintain certain levels of capital.  See Item
1. Business - Capital Standards.

The  USA  Patriot  Act
Title III of the United and Strengthening America by Providing Appropriate Tools
Required to Intercept and Obstruct Terrorism Act of 2001 (the USA Patriot Act")
includes numerous provisions for fighting international money laundering and
blocking terrorism access to the U.S. financial system.  The USA Patriot Act
requires certain additional due diligence and record keeping practices,
including, but not limited to, new customers, correspondent and private banking
accounts.

Part of the USA Patriot Act requires covered financial institutions to: (i)
establish an anti-money laundering program; (ii) establish appropriate
anti-money laundering policies, procedures and controls; (iii) appoint a Bank
Secrecy Act officer responsible for day-to-day compliance; and (iv) conduct
independent audits.  The Patriot Act also expands penalties for violation of the
anti-money laundering laws, including expanding the circumstances under which
funds in a bank account may be forfeited.  The Patriot Act also requires covered
financial institutions to respond under certain circumstances to requests for
information from federal banking agencies within 120 hours. Various measures are
currently pending before Congress to extend portions of the Patriot Act.

Privacy  Restrictions
The GLBA, in addition to the previous described changes in permissible
non-banking activities permitted to banks, bank holding companies and financial
holding companies, also requires financial institutions in the U.S. to provide
certain privacy disclosures to customers and consumers, to comply with certain
restrictions on the sharing and usage of personally identifiable information,
and to implement and maintain commercially reasonable customer information
safeguarding standards.


                                       10
<PAGE>
The Company believes that it complies with all provisions of the GLBA and all
implementing regulations and the Bank has developed appropriate policies and
procedures to meet its responsibilities in connection with the privacy
provisions of GLBA.

Dividends and Other Transfer of Funds
Dividends from the Bank constitute the principal source of income to the
Company.  The Company is a legal entity separate and distinct from the Bank.
The Bank is subject to various statutory and regulatory restrictions on its
ability to pay dividends to the Company.  Under such restrictions, the amount
available for payment of dividends to the Company by the Bank totaled $30.8
million at December 31, 2005.

The FDIC and the DFI also have authority to prohibit the Bank from engaging in
activities that, in their opinion, constitute unsafe or unsound practices in
conducting its business.  It is possible, depending upon the financial condition
of the bank in question and other factors, that the FDIC and the DFI could
assert that the payment of dividends or other payments might, under some
circumstances, be an unsafe or unsound practice.  Further, the FRB and the FDIC
have established guidelines with respect to the maintenance of appropriate
levels of capital by banks or bank holding companies under their jurisdiction.
Compliance with the standards set forth in such guidelines and the restrictions
that are or may be imposed under the prompt corrective action provisions of
federal law could limit the amount of dividends which the Bank or the Company
may pay.  An insured depository institution is prohibited from paying management
fees to any controlling persons or, with certain limited exceptions, making
capital distributions if after such transaction the institution would be
undercapitalized.  The DFI may impose similar limitations on the Bank.  See
"Prompt Corrective Regulatory Action and Other Enforcement Mechanisms" and
"Capital Standards" for a discussion of these additional restrictions on capital
distributions.

Transactions  with  Affiliates
The Bank is subject to certain restrictions imposed by federal law on any
extensions of credit to, or the issuance of a guarantee or letter of credit on
behalf of, the Company or other affiliates, the purchase of, or investments in,
stock or other securities thereof, the taking of such securities as collateral
for loans, and the purchase of assets of the Company or other affiliates.  Such
restrictions prevent the Company and other affiliates from borrowing from the
Bank unless the loans are secured by marketable obligations of designated
amounts.  Further, such secured loans and investments by the Bank to or in the
Company or to or in any other affiliates are limited, individually, to 10% of
the Bank's capital and surplus (as defined by federal regulations), and such
secured loans and investments are limited, in the aggregate, to 20% of the
Bank's capital and surplus (as defined by federal regulations).

In addition, the Company and its operating subsidiaries generally may not
purchase a low-quality asset from an affiliate, and other specified transactions
between the Company or its operating subsidiaries and an affiliate must be on
terms and conditions that are consistent with safe and sound banking practices.

Also, the Company and its operating subsidiaries may engage in transactions with
affiliates only on terms and under conditions that are substantially the same,
or at least as favorable to the Company or its subsidiaries, as those prevailing
at the time for comparable transactions with (or that in good faith would be
offered to) non-affiliated companies.

California law also imposes certain restrictions with respect to transactions
with affiliates.  Additionally, limitations involving the transactions with
affiliates may be imposed on the Bank under the prompt corrective action
provisions of federal law.  See Item 1. Business - Prompt Corrective Action and
Other Enforcement Mechanisms.


                                       11
<PAGE>
Capital  Standards
The FRB and the FDIC have established risk-based capital guidelines with respect
to the maintenance of appropriate levels of capital by United States banking
organizations.  These guidelines are intended to provide a measure of capital
that reflects the risk associated with a banking organization's operations for
both transactions reported on the balance sheet as assets and transactions, such
as letters of credit and recourse arrangements, which are recorded as off
balance sheet items.  Under these guidelines, nominal dollar amounts of assets
and credit equivalent amounts of off balance sheet items are multiplied by one
of several risk adjustment percentages, which range from 0% for assets with low
credit risk, such as certain U.S. Treasury securities, to 100% for assets with
relatively high credit risk, such as commercial loans.

The federal banking agencies require a minimum ratio of qualifying total capital
to risk-weighted assets of 8% and a minimum ratio of Tier 1 capital to risk-
weighted assets of 4%.  In addition to the risk-based guidelines, federal
banking regulators require banking organizations to maintain a minimum amount of
Tier 1 capital to total assets, referred to as the leverage ratio.  For a
banking organization rated in the highest of the five categories used by
regulators to rate banking organizations, the minimum leverage ratio of Tier 1
capital to total assets must be 4%.  In addition to these uniform risk-based
capital guidelines and leverage ratios that apply across the industry, the
regulators have the discretion to set individual minimum capital requirements
for specific institutions at rates significantly above minimum guidelines and
ratios.

As of December 31, 2005 and 2004 the Company and the Bank's risk-based capital
ratios were as follows:

<TABLE>
<CAPTION>
                                                                                                                To Be Well
                                                                                                             Capitalized Under
                                                                                  Regulatory Capital         Prompt Corrective
(in thousands)                                               Actual                  Requirements            Action Provisions
December 31, 2005                                      Amount        Ratio       Amount        Ratio       Amount        Ratio
---------------------------------------------------  -----------  -----------  -----------  -----------  -----------  -----------
<S>                                                  <C>          <C>          <C>          <C>          <C>          <C>
THE BANK:
Total Bank Capital to Risk Weighted Assets           $   148,139       12.14%  $    97,606        8.00%  $   122,008       10.00%
Tier 1 Bank Capital to Risk Weighted Assets          $   132,854       10.89%  $    48,803        4.00%  $    73,205        6.00%
Tier 1 Bank Capital to Average Assets                $   132,854       10.25%  $    51,852        4.00%  $    64,815        5.00%

THE COMPANY:
Total Consolidated Capital to Risk Weighted Assets   $   150,648       12.32%  $    97,805        8.00%       N/A          N/A
Tier 1 Consolidated Capital to Risk Weighted Assets  $   135,333       11.07%  $    48,903        4.00%       N/A          N/A
Tier 1 Consolidated Capital to Average Assets        $   135,333       10.42%  $    51,936        4.00%       N/A          N/A

December 31, 2004                                       Amount       Ratio        Amount       Ratio        Amount       Ratio
---------------------------------------------------  -----------  -----------  -----------  -----------  -----------  -----------
THE BANK:
Total Bank Capital to Risk Weighted Assets           $   136,916       13.00%  $    84,243        8.00%  $   105,303       10.00%
Tier 1 Bank Capital to Risk Weighted Assets          $   123,695       11.75%  $    42,121        4.00%  $    63,182        6.00%
Tier 1 Bank Capital to Average Assets                $   123,695       10.41%  $    47,540        4.00%  $    59,425        5.00%

THE COMPANY:
Total Consolidated Capital to Risk Weighted Assets   $   140,828       13.34%  $    84,437        8.00%       N/A          N/A
Tier 1 Consolidated Capital to Risk Weighted Assets  $   127,577       12.09%  $    42,218        4.00%       N/A          N/A
Tier 1 Consolidated Capital to Average Assets        $   127,577       10.69%  $    47,720        4.00%       N/A          N/A
</TABLE>

Prompt Corrective Action and Other Enforcement Mechanisms
The Federal Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA"),
among other things, identifies five capital categories for insured depository
institutions (well capitalized, adequately capitalized, undercapitalized,
significantly undercapitalized and critically undercapitalized) and requires the
respective


                                       12
<PAGE>
Federal regulatory agencies to implement systems for "prompt corrective action"
for insured depository institutions that do not meet minimum capital
requirements within such categories.  FDICIA imposes progressively more
restrictive constraints on operations, management and capital distributions,
depending on the category in which an institution is classified.  Failure to
meet the capital guidelines could also subject a banking institution to capital
raising requirements.  An "undercapitalized" Company must develop a capital
restoration plan.  At December 31, 2005 the Company exceeded all of the required
ratios for classification as "well capitalized."  It should be noted, however,
that the Company's capital category is determined solely for the purpose of
applying the federal banking agencies' prompt corrective action regulations and
the capital category may not constitute an accurate representation of the Bank's
overall financial condition or prospects.

An institution that, based upon its capital levels, is classified as well
capitalized, adequately capitalized, or undercapitalized may be treated as
though it were in the next lower capital category if the appropriate federal
banking agency, after notice and opportunity for hearing, determines that an
unsafe or unsound condition or practice warrants such treatment.  At each
successive lower capital category, an insured depository institution is subject
to more restrictions.

Banking agencies have also adopted regulations which mandate that regulators
take into consideration (i) concentrations of credit risk; (ii) interest rate
risk (when the interest rate sensitivity of an institution's assets does not
match the sensitivity of its liabilities or its off-balance-sheet position); and
(iii) risks from non-traditional activities, as well as an institution's ability
to manage those risks, when determining the adequacy of an institution's
capital.  That evaluation will be made as a part of the institution's regular
safety and soundness examination.  In addition, the banking agencies have
amended their regulatory capital guidelines to incorporate a measure for market
risk.  In accordance with the amended guidelines, the Company and any company
with significant trading activity must incorporate a measure for market risk in
its regulatory capital calculations.

In addition to measures taken under the prompt corrective action provisions,
commercial banking organizations may be subject to potential enforcement actions
by the federal banking agencies for unsafe or unsound practices in conducting
their businesses or for violations of any law, rule, regulation or any condition
imposed in writing by the agency or any written agreement with the agency.
Enforcement actions may include the imposition of a conservator or receiver, the
issuance of a cease-and-desist order that can be judicially enforced, the
termination of insurance of deposits (in the case of a depository institution),
the imposition of civil money penalties, the issuance of directives to increase
capital, the issuance of formal and informal agreements, the issuance of removal
and prohibition orders against institution-affiliated parties and the
enforcement of such actions through injunctions or restraining orders based upon
a judicial determination that the agency would be harmed if such equitable
relief was not granted. Additionally, a holding company's inability to serve as
a source of strength to its subsidiary banking organizations could serve as an
additional basis for a regulatory action against the holding company.

Safety  and  Soundness  Standards
The federal banking agencies have adopted guidelines designed to assist in
identifying and addressing potential safety and soundness concerns before
capital becomes impaired.  The guidelines set forth operational and managerial
standards relating to: (i) internal controls, information systems and internal
audit systems; (ii) loan documentation; (iii) credit underwriting; (iv) asset
growth; (v) earnings; and (vi) compensation, fees and benefits.  In addition,
the federal banking agencies have also adopted safety and soundness guidelines
with respect to asset quality and earnings standards.  These guidelines provide
six standards for establishing and maintaining a system to identify problem
assets and prevent those assets from deteriorating.  Under these standards, any
insured depository institution should: (i) conduct periodic asset quality
reviews to identify problem assets; (ii) estimate the inherent losses in problem
assets and establish reserves that are sufficient to absorb estimated losses;
(iii) compare problem asset totals to capital; (iv) take appropriate corrective
action to resolve problem assets; (v) consider the size and potential risks of
material asset concentrations; and (vi) provide periodic asset quality reports
with adequate information for management and the Board of Directors to


                                       13
<PAGE>
assess the level of asset risk.  These guidelines also set forth standards for
evaluating and monitoring earnings and for ensuring that earnings are sufficient
for the maintenance of adequate capital and reserves.

Premiums for Deposit Insurance
The Company's deposit accounts are insured by the Bank Insurance Fund ("BIF"),
as administered by the FDIC, up to the maximum permitted by law.  Insurance of
deposits may be terminated by the FDIC upon a finding that the institution has
engaged in unsafe or unsound practices, is in an unsafe or unsound condition to
continue operation, or has violated any applicable law, regulation, rule, order,
or condition imposed by the FDIC or the Company's primary regulator.

The FDIC charges an annual assessment for the insurance of deposits, which as of
December 31, 2005, ranged from 0 to 27 basis points per $100 of insured
deposits, based on the results of examinations, findings by the Company's
primary federal regulator and other information deemed relevant by the FDIC to
the Company's financial condition and the risk posed to the BIF.  The risk
classification is based on an institution's capital group and supervisory
subgroup assignment.  An institution's risk category is based upon whether the
institution is well capitalized, adequately capitalized, or less than adequately
capitalized.  Each insured depository institution is also assigned to one of the
following "supervisory subgroups."  Subgroup A, B or C.  Subgroup A institutions
are financially sound institutions with few minor weaknesses; Subgroup B
institutions are institutions that demonstrate weaknesses which, if not
corrected, could result in significant deterioration; and Subgroup C
institutions are institutions for which there is a substantial probability that
the FDIC will suffer a loss in connection with the institution unless effective
action is taken to correct the areas of weakness.  Insured institutions are not
allowed to disclose their risk assessment classification and no assurance can be
given as to what the future level of premiums will be.

The President signed the budget reconciliation package (S. 1932) that contains
the comprehensive Federal Deposit Insurance Reform Act of 2005. This
legislation, among other things, (i) merges the BIF and the Savings Associations
Insurance Fund into the Deposit Insurance Fund (DIF); (ii) establishes a process
for indexing coverage levels to account for inflation; (iii) sets a cap on the
DIF; (iv) sets up a system of dividends; (v) gives certain banks credit for past
overpayments to the fund; (vi) gives the FDIC added flexibility should the fund
ever face financial difficulty; and (vii) increases deposit insurance coverage
to $250,000 for certain retirement accounts. The legislation will become
effective six months after the FDIC completes their regulations covering the
above items.

Community Reinvestment Act ("CRA") and Fair Lending
The Bank is subject to certain fair lending requirements and reporting
obligations involving lending, investing and other CRA activities.  CRA requires
each insured depository institution to identify the communities served by the
institution's offices and to identify the types of credit and investments the
institution is prepared to extend within such communities including low and
moderate income neighborhoods.  It also requires the institution's regulators to
assess the institution's performance in meeting the credit needs of its
community and to take such assessment into consideration in reviewing
application for mergers, acquisitions, relocation of existing branches, opening
of new branches and other transactions.  A bank may be subject to substantial
penalties and corrective measures for a violation of certain fair lending laws.
The federal banking agencies may take compliance with such laws and CRA into
consideration when regulating and supervising other banking activities.

A bank's compliance with the Community Reinvestment Act is based on a
performance based evaluation system which bases CRA ratings on an institution's
lending service and investment performance.  An unsatisfactory rating may be the
basis for denying a merger application.  The Bank's latest CRA examination was
completed by the Federal Reserve Bank of San Francisco and the lending test
portion included a review of small business, small farm, and home mortgage loans
originated between October 1, 2001 and September 30, 2003. Community development
lending as well as investment and service activities were reviewed for all of


                                       14
<PAGE>
2002 and 2003.  The Bank received a High Satisfactory rating in the lending area
and an Outstanding rating in the areas of investment and service.  The Bank
received an overall rating of OUTSTANDING in complying with its CRA obligations.
The Bank is expecting to have another CRA exam during the 2nd quarter of 2006.

The Sarbanes-Oxley Act of 2002 ("the Act")
This legislation addresses accounting oversight and corporate governance
matters, including:

-    the creation of a five-member oversight board that sets standards for
     accountants and has investigative and disciplinary powers;
-    the prohibition of accounting firms from providing various types of
     consulting services to public clients and requires accounting firms to
     rotate partners among public client assignments every five years;
-    increased penalties for financial crimes;
-    expanded disclosure of corporate operations and internal controls and
     certification of financial statements;
-    enhanced controls on, and reporting of, insider trading; and
-    prohibition on lending to officers and directors of public companies,
     although the Bank may continue to make these loans within the constraints
     of existing banking regulations.

As a public reporting company, the Company is subject to the requirements of
this legislation and related rules and regulations issued by the Securities and
Exchange Commission. The Company has incurred additional expense as a result of
the Act, but compliance with the Act has not had a material impact on the
business.

Statistical Disclosures
The tables on the following pages set forth certain statistical information for
Farmers & Merchants Bancorp on a consolidated basis.  This information should be
read in conjunction with "Management's Discussion and Analysis" in the Company's
2005 Annual Report to Shareholders, which is filed herewith as Exhibit 13, and
which is incorporated herein by reference and with the Company's Consolidated
Financial Statements and the Notes thereto included in Company's 2005 Annual
Report to Shareholders, also contained in Exhibit 13, and which is incorporated
herein by reference.


                                       15
<PAGE>
<TABLE>
<CAPTION>
FARMERS & MERCHANTS BANCORP

INVESTMENT PORTFOLIO
The following table summarizes the balances and distributions of the
investment securities held on the dates indicated.   Available    Held to   Available    Held to   Available    Held to
                                                      for Sale   Maturity    for Sale   Maturity    for Sale   Maturity
---------------------------------------------------  ---------------------  ---------------------  ---------------------
DECEMBER 31:  (IN THOUSANDS)                                  2005                   2004                   2003
---------------------------------------------------  ---------------------  ---------------------  ---------------------
<S>                                                  <C>         <C>        <C>         <C>        <C>         <C>
  U. S. Agency                                       $   29,926  $  30,644  $   75,065  $  19,943  $   76,398  $       -
  Municipal                                              15,576     66,260      18,009     56,240      28,794     37,582
  Mortgage-Backed Securities                            106,433     10,881      85,831     13,471     108,953          -
  Other                                                   6,094      2,126       6,583        298       9,820        375
---------------------------------------------------  ----------  ---------  ----------  ---------  ----------  ---------
    TOTAL BOOK VALUE                                 $  158,029  $ 109,911  $  185,488  $  89,952  $  223,965  $  37,957
===================================================  ==========  =========  ==========  =========  ==========  =========
    FAIR VALUE                                       $  158,029  $ 108,060  $  185,488  $  90,212  $  223,965  $  38,739
===================================================  ==========  =========  ==========  =========  ==========  =========
</TABLE>

<TABLE>
<CAPTION>
ANALYSIS OF INVESTMENT SECURITIES AVAILABLE-FOR-SALE
The following table is a summary of the relative maturities and yields of the Company's investment securities
Available-for-Sale as of December 31, 2005. Non-taxable municipal securities have been calculated on a fully taxable
equivalent basis.


INVESTMENT SECURITIES AVAILABLE-FOR-SALE                                                                Fair    Average
DECEMBER 31, 2005 (IN THOUSANDS)                                                                       Value     Yield
----------------------------------------------------------------------------------------------------  --------  --------
<S>                                                                                                   <C>       <C>
U.S. AGENCY
  One year or less                                                                                    $      -        -
  After one year through five years                                                                     20,014     3.74%
  After five years through ten years                                                                     9,912     4.13%
  After ten years                                                                                            -        -
----------------------------------------------------------------------------------------------------  --------  --------
    TOTAL U.S. AGENCY SECURITIES                                                                        29,926     3.87%
----------------------------------------------------------------------------------------------------  --------  --------
MUNICIPAL - NON-TAXABLE
  One year or less                                                                                       5,047     4.22%
  After one year through five years                                                                      9,599     5.40%
  After five years through ten years                                                                         -        -
  After ten years                                                                                          930     7.93%
----------------------------------------------------------------------------------------------------  --------  --------
    TOTAL NON-TAXABLE MUNICIPAL SECURITIES                                                              15,576     5.17%
----------------------------------------------------------------------------------------------------  --------  --------
MORTGAGE-BACKED SECURITIES
  One year or less                                                                                           -        -
  After one year through five years                                                                      2,558     3.50%
  After five years through ten years                                                                    33,571     3.80%
  After ten years                                                                                       70,304     4.81%
----------------------------------------------------------------------------------------------------  --------  --------
    TOTAL MORTGAGE-BACKED SECURITIES                                                                   106,433     4.46%
----------------------------------------------------------------------------------------------------  --------  --------
OTHER
  One year or less                                                                                       6,094     5.57%
  After one year through five years                                                                          -        -
  After five years through ten years                                                                         -        -
  After ten years                                                                                            -        -
----------------------------------------------------------------------------------------------------  --------  --------
    TOTAL OTHER SECURITIES                                                                               6,094     5.57%
----------------------------------------------------------------------------------------------------  --------  --------
    TOTAL INVESTMENT SECURITIES AVAILABLE FOR SALE                                                    $158,029     4.46%
====================================================================================================  ========  ========
Note:  The average yield for floating rate securities is calculated using the current stated yield.
</TABLE>

                                       16
<PAGE>
<TABLE>
<CAPTION>
FARMERS & MERCHANTS BANCORP
ANALYSIS OF INVESTMENT SECURITIES HELD-TO-MATURITY
The following table is a summary of the relative maturities and yields of the
Company's investment securities Held-to-Maturity as of December 31, 2005.
Non-taxable municipal securities have been calculated on a fully taxable
equivalent basis.


INVESTMENT SECURITIES HELD-TO-MATURITY                Book    Average
DECEMBER 31, 2005 (IN THOUSANDS)                     Value     Yield
--------------------------------------------------  --------  --------
<S>                                                 <C>       <C>
U.S. AGENCY
  One year or less                                  $      -        -
  After one year through five years                   14,999     3.70%
  After five years through ten years                  15,645     4.39%
  After ten years                                          -        -
--------------------------------------------------  --------  --------
    TOTAL U.S. AGENCY SECURITIES                      30,644     4.05%
--------------------------------------------------  --------  --------
MUNICIPAL - NON-TAXABLE
  One year or less                                     1,249     6.28%
  After one year through five years                   11,775     4.16%
  After five years through ten years                   9,081     4.37%
  After ten years                                     44,155     5.21%
--------------------------------------------------  --------  --------
    TOTAL NON-TAXABLE MUNICIPAL SECURITIES            66,260     4.93%
--------------------------------------------------  --------  --------
MORTGAGE-BACKED SECURITIES
  One year or less                                         -        -
  After one year through five years                        -        -
  After five years through ten years                  10,881     3.86%
  After ten years                                          -        -
--------------------------------------------------  --------  --------
    TOTAL MORTGAGE-BACKED SECURITIES                  10,881     3.86%
--------------------------------------------------  --------  --------
OTHER
  One year or less                                         -        -
  After one year through five years                        -        -
  After five years through ten years                     145     6.98%
  After ten years                                      1,981     4.60%
--------------------------------------------------  --------  --------
    TOTAL OTHER SECURITIES                             2,126     4.76%
--------------------------------------------------  --------  --------
    TOTAL INVESTMENT SECURITIES HELD-TO-MATURITY    $109,911     4.58%
==================================================  ========  ========
</TABLE>


                                       17
<PAGE>
<TABLE>
<CAPTION>
FARMERS & MERCHANTS BANCORP

LOAN  DATA
(in  thousands)
The following table shows the Bank's loan composition by type of loan.
                                                                            December 31,
                                                          2005       2004       2003       2002       2001
------------------------------------------------------  ---------  ---------  ---------  ---------  ---------
<S>                                                     <C>        <C>        <C>        <C>        <C>
  Real Estate                                           $432,378   $431,746   $386,735   $322,074   $282,328
  Real Estate Construction                               110,235     62,446     77,115     66,467     49,692
  Home Equity                                             69,013     63,782     55,827     45,150     22,123
  Agricultural                                           170,657    151,002    134,862    109,130    110,707
  Commercial                                             174,530    142,133    136,955    135,877    117,202
  Consumer                                                12,653     11,933     11,979     13,948     17,022
  Credit Card                                              5,353      5,021      4,549      4,252      3,157
  Other                                                      952      1,019        976      1,795        954
------------------------------------------------------  ---------  ---------  ---------  ---------  ---------
TOTAL LOANS                                              975,771    869,082    808,998    698,693    603,185
Less:
  Unearned Income                                          2,514      2,174      2,092      2,018      1,016
  Allowance for Loan Losses                               17,860     17,727     17,220     16,684     12,709
------------------------------------------------------  ---------  ---------  ---------  ---------  ---------
LOANS, NET                                              $955,397   $849,181   $789,686   $679,991   $589,460
======================================================  =========  =========  =========  =========  =========

There were no concentrations of loans exceeding 10% of total loans which were not otherwise disclosed as a
category of loans in the above table.

NON-PERFORMING LOANS
(in thousands)
                                                                            December 31,
                                                          2005       2004       2003       2002       2001
------------------------------------------------------  ---------  ---------  ---------  ---------  ---------
NONACCRUAL LOANS
  Real Estate                                           $    464   $    214   $  1,670   $  2,180   $  1,015
  Commercial                                                 142          0        516        452      1,302
  Consumer                                                     0          0        181          2         36
  Credit Card                                                  0          0          0          0          0
  Other                                                        0          0          0        263          0
------------------------------------------------------  ---------  ---------  ---------  ---------  ---------
TOTAL NONACCRUAL LOANS                                       606        214      2,367      2,897      2,353
------------------------------------------------------  ---------  ---------  ---------  ---------  ---------

ACCRUING LOANS PAST DUE 90 DAYS OR MORE
  Real Estate                                                 66          0        139          1          0
  Commercial                                                   0          0         41          0          0
  Consumer                                                     0          0          0          0          0
  Credit Card                                                 22         11         37          9         56
  Other                                                        0          0          0          0          0
------------------------------------------------------  ---------  ---------  ---------  ---------  ---------
TOTAL ACCRUING LOANS PAST DUE 90 DAYS OR MORE                 88         11        217         10         56
------------------------------------------------------  ---------  ---------  ---------  ---------  ---------
TOTAL NON-PERFORMING LOANS                              $    694   $    225   $  2,584   $  2,907   $  2,409
======================================================  =========  =========  =========  =========  =========

Other Real Estate Owned                                 $      0   $      0   $      0   $      0   $      0

Non-Performing Loans as a Percent of Total Loans            0.07%      0.03%      0.32%      0.42%      0.40%
======================================================  =========  =========  =========  =========  =========

Allowance for Loan Losses as a Percent of Total Loans       1.83%      2.04%      2.13%      2.39%      2.11%
======================================================  =========  =========  =========  =========  =========
</TABLE>
The Bank's policy is to place loans (Excluding Credit Card Loans) on nonaccrual
status when the principal or interest is past due for ninety days or more unless
it is both well secured and in the process of collection. Any interest accrued,
but unpaid, is reversed against current income. Thereafter interest is
recognized as income only as it is collected in cash. The gross interest income
that would have been recorded if the loans had been current for the year ending
December 31, 2005 was $49,794. For a discussion of impaired loan policy see Note
4. in the Notes to the Consolidated Financial Statements of the Company's 2005
Annual Report to Shareholders.


                                       18
<PAGE>
<TABLE>
<CAPTION>
FARMERS & MERCHANTS BANCORP

PROVISION AND ALLOWANCE FOR LOAN LOSSES
(dollars in thousands)
A five-year review of activity in the allowance for loan losses and an allocation by loan
type of the allowance is shown in the tables below.


                                               2005      2004      2003      2002      2001
-------------------------------------------  --------  --------  --------  --------  --------
<S>                                          <C>       <C>       <C>       <C>       <C>
Allowance for Loan Losses Beginning of Year  $17,727   $17,220   $16,684   $12,709   $11,876
Provision Charged to Expense                     425     1,275       625     4,926     1,000

CHARGE OFFS:
  Real Estate                                      -         -         1         -         -
  Agricultural                                   199         5         0       149        94
  Commercial                                     442       700       282       966       507
  Consumer                                        26         7       175        78        68
  Credit Card                                    200       243       239        93        85
  Other                                            -         -         -         -         -
-------------------------------------------  --------  --------  --------  --------  --------
    TOTAL CHARGE OFFS                            867       955       697     1,286       754
-------------------------------------------  --------  --------  --------  --------  --------

RECOVERIES:
  Real Estate                                      -         -       143         0        18
  Agricultural                                   376        26        17       141         0
  Commercial                                     134       209       394       149       525
  Consumer                                        19        32        25        34        14
  Credit Card                                     46        31        29        11        30
  Other                                            -         -         -         -         -
-------------------------------------------  --------  --------  --------  --------  --------
    TOTAL RECOVERIES                             575       298       608       335       587
-------------------------------------------  --------  --------  --------  --------  --------
NET (CHARGE-OFFS) RECOVERIES                    (292)     (657)      (89)     (951)     (167)
-------------------------------------------  --------  --------  --------  --------  --------
LESS RECLASSIFICATION ADJUSTMENT                   -      (111)        -         -         -
-------------------------------------------  --------  --------  --------  --------  --------
TOTAL ALLOWANCE FOR LOSSES                   $17,860   $17,727   $17,220   $16,684   $12,709
===========================================  ========  ========  ========  ========  ========
</TABLE>
*As of December 31, 2004, the Company reclassified $111,000 of the Allowance for
Loan Losses that pertained to commitments under commercial and standby letters
of credit to the "other liabilities" section of the Consolidated Balance Sheets.

<TABLE>
<CAPTION>
RATIOS:
Allowance for Losses to:
<S>                                          <C>       <C>       <C>       <C>       <C>
  Loans at Year End                             1.83%     2.04%     2.13%     2.39%     2.11%
  Average Loans                                 1.98%     2.15%     2.33%     2.62%     2.42%

Consolidated Net Charge-Offs to:
  Loans at Year End                             0.03%     0.08%     0.01%     0.14%     0.03%
  Average Loans                                 0.03%     0.08%     0.01%     0.15%     0.03%
</TABLE>

For a description of the Company's policy regarding the Allowance for Loan
Losses, see Note 1. in the Notes to the Consolidated Financial Statements of the
2005 Annual Report to Shareholders.

<TABLE>
<CAPTION>
ALLOCATION OF THE ALLOWANCE FOR LOSSES
(dollars in thousands)        AMOUNT OF ALLOWANCE ALLOCATION AT DECEMBER 31,
                          -----------------------------------------------------
                            2005       2004       2003       2002       2001
------------------------  ---------  ---------  ---------  ---------  ---------
<S>                       <C>        <C>        <C>        <C>        <C>
Real Estate               $   5,344  $   5,136  $   6,216  $   4,718  $   3,433
Real Estate Construction      1,088        427      1,080        912        593
Home Equity                     416        170        471        450        210
Agricultural                  1,786      4,342      4,681      3,702      3,722
Commercial                    8,317      5,849      3,957      5,681      3,873
Consumer                         89        133        104        427        283
Other                           543      1,312        569        715        435
Unallocated                     277        358        142         79        160
------------------------  ---------  ---------  ---------  ---------  ---------
Total                     $  17,860  $  17,727  $  17,220  $  16,684  $  12,709
========================  =========  =========  =========  =========  =========
</TABLE>

<TABLE>
<CAPTION>
                                    PERCENT OF LOANS IN EACH CATEGORY
                                      TO TOTAL LOANS AT DECEMBER 31,
                          -----------------------------------------------------
                            2005       2004       2003       2002       2001
------------------------  ---------  ---------  ---------  ---------  ---------
<S>                       <C>        <C>        <C>        <C>        <C>
Real Estate                   44.3%      49.7%      47.8%      46.1%      46.8%
Real Estate Construction      11.3%       7.2%       9.5%       9.5%       8.2%
Home Equity                    7.1%       7.3%       6.9%       6.5%       3.7%
Agricultural                  17.5%      17.4%      16.7%      15.6%      18.4%
Commercial                    17.9%      16.4%      16.9%      19.4%      19.4%
Consumer                       1.3%       1.4%       1.5%       2.0%       2.8%
Credit Card                    0.5%       0.6%       0.6%       0.6%       0.5%
Other                          0.1%       0.1%       0.1%       0.3%       0.2%
------------------------  ---------  ---------  ---------  ---------  ---------
Total                        100.0%     100.0%     100.0%     100.0%     100.0%
========================  =========  =========  =========  =========  =========
</TABLE>


                                       19
<PAGE>
<TABLE>
<CAPTION>
FARMERS & MERCHANTS BANCORP
MATURITIES AND RATE SENSITIVITY OF LOANS
(in thousands)
The following table shows the maturity distribution and interest
rate sensitivity of certain loans of the Company on December 31, 2005


                                       Over One
                                       Year to      Over
                           One Year      Five       Five
                           or Less      Years       Years      Total    Percent
------------------------  ----------  ----------  ---------  ---------  --------
<S>                       <C>         <C>         <C>        <C>        <C>
Real Estate               $  19,730   $  84,046   $328,602   $432,378     45.19%
Real Estate Construction     57,886      30,911     21,438    110,235     11.52%
Home Equity                      40         198     68,775     69,013      7.21%
Agricultural                 80,233      75,313     15,111    170,657     17.84%
Commercial                  101,013      60,131     13,386    174,530     18.24%
------------------------  ----------  ----------  ---------  ---------  --------
  Total                   $ 258,902   $ 250,599   $447,312   $956,813    100.00%
========================  ==========  ==========  =========  =========  ========


Rate Sensitivity:
  Predetermined Rate      $  44,191   $  83,045   $137,563   $264,799     27.68%
  Floating Rate             214,711     167,554    309,749    692,014     72.32%
------------------------  ----------  ----------  ---------  ---------  --------
  Total                   $ 258,902   $ 250,599   $447,312   $956,813    100.00%
========================  ==========  ==========  =========  =========  ========
Percent                       27.06%      26.19%     46.75%    100.00%
========================  ==========  ==========  =========  =========
</TABLE>


COMMITMENTS AND LINES OF CREDIT

The Company issues formal commitments or lines of credit to financially
responsible commercial and agricultural enterprises. Such commitments can be
either secured or unsecured and are typically in the form of revolving lines of
credit for seasonal working capital needs. Occasionally, such commitments are in
the form of letters of credit to facilitate the customer's particular business
transactions. For further discussion about commitments, see Note 15 in the
Company's 2005 Annual Report to Shareholders.


                                       20
<PAGE>
<TABLE>
<CAPTION>
FARMERS & MERCHANTS BANCORP
ANALYSIS OF CERTIFICATES OF DEPOSIT
(In thousands)
The following table sets forth, by time remaining to maturity, the Company's
time deposits in amounts of $100,000 or more for the periods indicated.

                                             December 31,
                                                 2005
-------------------------------------------  -------------
<S>                                          <C>
TIME DEPOSITS OF $100,000 OR MORE
  Three Months or Less                       $     123,593
  Over Three Months Through Six Months              41,093
  Over Six Months Through Twelve Months             36,684
  Over Twelve Months                                 6,606
-------------------------------------------  -------------
    TOTAL TIME DEPOSITS OF $100,000 OR MORE  $     207,976
===========================================  =============
</TABLE>
Refer to the Year-To-Date Average Balances and Rate Schedules for information on
separate deposit categories.


RATIOS

Refer to the Five Year Financial Summary of Operations located in the Farmers &
Merchants Bancorp Annual Report to Shareholders for the year ended December 31,
2005 for calculations of Return on Average Equity, Return on Average Assets,
Dividend Payout Ratio and Equity to Assets Ratio.


SHORT-TERM BORROWINGS

Refer to Note 9 of the Consolidated Financial Statements included in the Farmers
& Merchants Bancorp Annual Report to Shareholders for the year ending December
31, 2005.


ITEM 1A. RISK FACTORS

An investment in our common stock is subject to risks inherent to our business.
The material risks and uncertainties that management believes may affect our
business are described below. Before making an investment decision, you should
carefully consider the risks and uncertainties described below together with all
of the other information included or incorporated by reference in this report.
The risks and uncertainties described below are not the only ones facing our
business. Additional risks and uncertainties that management is not aware of or
focused on or that management currently deems immaterial may also impair our
business operations. This report is qualified in its entirety by these risk
factors.

If any of the following risks actually occur, our financial condition and
results of operations could be materially and adversely affected. If this were
to happen, the value of our common stock could decline significantly, and you
could lose all or part of your investment.


                                       21
<PAGE>
RISKS  ASSOCIATED  WITH  OUR  BUSINESS.
---------------------------------------

WE  ARE  DEPENDENT ON REAL ESTATE AND A DOWNTURN IN THE REAL ESTATE MARKET COULD
HURT  OUR  BUSINESS.

A significant portion of our loan portfolio is dependent on real estate. At
December 31, 2005, real estate served as the principal source of collateral with
respect to approximately 63% of our loan outstandings. A decline in current
economic conditions or rising interest rates could have an adverse effect on the
demand for new loans, the ability of borrowers to repay outstanding loans, the
value of real estate and other collateral securing loans and the value of real
estate owned by us, as well as our financial condition and results of operations
in general and the market value of our common stock.

Acts of nature, including earthquakes, floods and fires, which may cause
uninsured damage and other loss of value to real estate that secures these
loans, may also negatively impact our financial condition.

OUR REAL ESTATE LENDING ALSO EXPOSES US TO THE RISK OF ENVIRONMENTAL
LIABILITIES.

In the course of our business, we may foreclose and take title to real estate,
and could be subject to environmental liabilities with respect to these
properties.  We may be held liable to a governmental entity or to third persons
for property damage, personal injury, investigation and clean-up costs incurred
by these parties in connection with environmental contamination, or may be
required to investigate or clean up hazardous or toxic substances, or chemical
releases at a property.  The costs associated with investigation or remediation
activities could be substantial.  In addition, as the owner or former owner of a
contaminated site, we may be subject to common law claims by third parties based
on damages and costs resulting from environmental contamination emanating from
the property.  If we ever become subject to significant environmental
liabilities, our business, financial condition, liquidity and results of
operations could be materially and adversely affected.

OUR BUSINESS IS SUBJECT TO INTEREST RATE RISK AND CHANGES IN INTEREST RATES MAY
ADVERSELY AFFECT OUR PERFORMANCE AND FINANCIAL CONDITION.

Our earnings are impacted by changing interest rates. Changes in interest rates
impact the demand for new loans, the credit profile of our borrowers, the rates
received on loans and securities and rates paid on deposits and borrowings. The
difference between the rates received on loans and securities and the rates paid
on deposits and borrowings is known as interest rate spread. Given our current
volume and mix of interest-bearing liabilities and interest-earning assets, we
would expect our interest rate spread to increase if interest rates rise and,
conversely, to decline if interest rates fall. Increasing levels of competition
in the banking and financial services business may decrease our interest rate
spread by forcing us to offer lower lending interest rates and pay higher
deposit interest rates. Although we believe our current level of interest rate
sensitivity is reasonable, significant fluctuations in interest rates and
increasing competition may have an adverse effect on our business, financial
condition and results of operations.

A sustained decrease in market interest rates could adversely affect our
earnings.  When interest rates decline, borrowers tend to refinance higher-rate,
fixed-rate loans at lower rates, prepaying their existing loans.  Under those
circumstances, we would not be able to reinvest those prepayments in assets
earning interest rates as high as the rates on the prepaid loans.  In addition,
our commercial real estate and commercial loans, which carry interest rates
that, in general, adjust in accordance with changes in the prime rate, will
adjust to lower rates.  We are also significantly affected by the level of loan
demand available in our market. The inability to make sufficient loans directly
affects the interest income we earn. Lower loan demand will generally result in
lower interest income realized as we place funds in lower yielding investments.


                                       22
<PAGE>
FAILURE TO SUCCESSFULLY EXECUTE OUR STRATEGY COULD ADVERSELY AFFECT OUR
PERFORMANCE.

Our financial performance and profitability depends on our ability to execute
our corporate growth strategy.   Continued growth, however, may present
operating and other problems that could adversely affect our business, financial
condition and results of operations.   Accordingly, there can be no assurance
that we will be able to execute our growth strategy or maintain the level of
profitability that we have recently experienced.  Factors that may adversely
affect our ability to attain our long-term financial performance goals include
those stated elsewhere in this section, as well as:

     -    Inability to control non-interest expense, including, but not limited
          to, rising employee and healthcare costs;

     -    Inability to increase non-interest income; and

     -    Continuing ability to expand through de novo branching or otherwise.


ECONOMIC CONDITIONS IN OUR SERVICE AREAS COULD ADVERSELY AFFECT OUR OPERATIONS
AND/OR CAUSE US TO SUSTAIN LOSSES.

Our retail and commercial banking operations are concentrated primarily in
Sacramento, San Joaquin, Stanislaus and Merced Counties.  As a result of this
geographic concentration, our results of operations depend largely upon economic
conditions in this area.  A significant source of risk arises from the
possibility that losses will be sustained if a significant number of our
borrowers, guarantors and related parties fail to perform in accordance with the
terms of their loans. This risk increases when the economy is weak. We have
adopted underwriting and credit monitoring procedures and credit policies,
including the establishment and review of the allowance for loan losses, that
management believes are appropriate to minimize this risk by assessing the
likelihood of nonperformance, tracking loan performance and diversifying our
credit portfolio. These policies and procedures, however, may not prevent
unexpected losses that could materially adversely affect our results of
operations in general and the market value of our stock.

This Company's service areas can be significantly impacted by the seasonal and
cyclical trends of the agricultural industry.  As a result, the Company's
financial results are influenced by the seasonal banking needs of its
agricultural customers (e.g., during the spring and summer customers draw down
their deposit balances and increase loan borrowing to fund the purchase of
equipment and the planting of crops. Correspondingly, deposit balances are
replenished and loans repaid in late fall and winter as crops are harvested and
sold).  Additionally, although the Company's loan portfolio is believed to be
well diversified, at various times during the year approximately 35% of the
Company's loan balances can be outstanding to agricultural borrowers.
Commitments are well diversified across various commodities, including dairy,
grapes, walnuts, almonds, cherries, apples, pears, walnuts, and various row
crops.  Additionally, many individual borrowers are themselves diversified
across commodity types, reducing their exposure, and therefore the Company's, to
cyclical downturns in any one commodity.

WE  FACE STRONG COMPETITION FROM FINANCIAL SERVICE COMPANIES AND OTHER COMPANIES
THAT  OFFER  BANKING  SERVICES  THAT  COULD  HURT  OUR  BUSINESS.

The financial services business in our market areas is highly competitive. It is
becoming increasingly competitive due to changes in regulation, technological
advances, and the accelerating pace of consolidation among financial services
providers. We face competition both in attracting deposits and in making loans.
We compete for loans principally through the interest rates and loan fees we
charge and the efficiency and quality of services we provide. Increasing levels
of competition in the banking and financial services business may reduce our
market share, decrease loan demand, cause the prices we charge for our services
to fall, or decrease


                                       23
<PAGE>
our net interest margin by forcing us to offer lower lending interest rates and
pay higher deposit interest rates.  Therefore, our results may differ in future
periods depending upon the nature or level of competition.


Technology and other changes are allowing parties to complete financial
transactions that historically have involved banks through alternative methods.
For example, consumers can now maintain funds that would have historically been
held as bank deposits in brokerage accounts or mutual funds. Consumers can also
complete transactions such as paying bills and/or transferring funds directly
without the assistance of banks. The process of eliminating banks as
intermediaries, known as "disintermediation," could result in the loss of fee
income, as well as the loss of customer deposits and the related income
generated from those deposits. The loss of these revenue streams and the lower
cost deposits as a source of funds could have a material adverse effect on our
financial condition and results of operations.


WE MAY NOT BE ABLE TO ATTRACT AND RETAIN SKILLED PEOPLE.

Our success depends, in large part, on our ability to attract and retain key
people. Competition for the best people in most of our activities can be intense
and we may not be able to hire people or to retain them. The unexpected loss of
services of one or more of our key personnel could have a material adverse
impact on our business because of their skills, knowledge of our market, years
of industry experience and the difficulty of promptly finding qualified
replacement personnel.


OUR INTERNAL OPERATIONS ARE SUBJECT TO A NUMBER OF RISKS.

We are subject to certain operations risks, including, but not limited to, data
processing system failures and errors, customer or employee fraud and
catastrophic failures resulting from terrorist acts or natural disasters. We
maintain a system of internal controls to mitigate against such occurrences and
maintain insurance coverage for such risks that are insurable, but should such
an event occur that is not prevented or detected by our internal controls,
uninsured or in excess of applicable insurance limits, it could have a
significant adverse impact on our business, financial condition or results of
operations.

Information Systems.  We rely heavily on communications and information systems
to conduct our business. Any failure, interruption or breach in security of
these systems could result in failures or disruptions in our customer
relationship management, general ledger, deposit, loan and other systems. While
we have policies and procedures designed to prevent or limit the effect of the
failure, interruption or security breach of our information systems, there can
be no assurance that any such failures, interruptions or security breaches will
not occur or, if they do occur, that they will be adequately addressed. The
occurrence of any failures, interruptions or security breaches of our
information systems could damage our reputation, result in a loss of customer
business, subject us to additional regulatory scrutiny, or expose us to civil
litigation and possible financial liability, any of which could have a material
adverse effect on our financial condition and results of operations.

Technological Advances. The financial services industry is continually
undergoing rapid technological change with frequent introductions of new
technology-driven products and services. The effective use of technology
increases efficiency and enables financial institutions to better serve
customers and to reduce costs. Our future success depends, in part, upon our
ability to address the needs of our customers by using technology to provide
products and services that will satisfy customer demands, as well as to create
additional efficiencies in our operations. Many of our competitors have
substantially greater resources to invest in technological improvements. We may
not be able to effectively implement new technology-driven products and services
or be successful in marketing these products and services to our customers.
Failure to successfully keep pace with technological change affecting the
financial services industry could have a material adverse impact on our business
and, in turn, our financial condition and results of operations.


                                       24
<PAGE>
Severe Weather, Natural Disasters, Acts Of War Or Terrorism and Other External
Events.  Severe weather, natural disasters, acts of war or terrorism and other
adverse external events could have a significant impact on our ability to
conduct business. Such events could affect the stability of our deposit base,
impair the ability of borrowers to repay outstanding loans, impair the value of
collateral securing loans, cause significant property damage, result in loss of
revenue and/or cause us to incur additional expenses.  Operations in several of
our markets could be disrupted by both the evacuation of large portions of the
population as well as damage and or lack of access to our banking and operation
facilities. While we have not experienced such an occurrence to date, other
severe weather or natural disasters, acts of war or terrorism or other adverse
external events may occur in the future. Although management has established
disaster recovery policies and procedures, the occurrence of any such event
could have a material adverse effect on our business, which, in turn, could have
a material adverse effect on our financial condition and results of operations.

WE DEPEND ON CASH DIVIDENDS FROM OUR SUBSIDIARY BANK TO MEET OUR CASH
OBLIGATIONS.

As a holding company, dividends from our subsidiary bank provide a substantial
portion of our cash flow used to service the interest payments on our Trust
Preferred Securities and our other obligations, including cash dividends.  See
"Item 5 - Market for Common Equity and Related Stockholder Matters."  Various
statutory provisions restrict the amount of dividends our subsidiary bank can
pay to us without regulatory approval.

RISKS ASSOCIATED WITH OUR INDUSTRY.
-----------------------------------

WE ARE SUBJECT TO GOVERNMENT REGULATION THAT COULD LIMIT OR RESTRICT OUR
ACTIVITIES, WHICH IN TURN COULD ADVERSELY IMPACT OUR OPERATIONS.

The financial services industry is regulated extensively. Federal and State
regulation is designed primarily to protect the deposit insurance funds and
consumers, and not to benefit our shareholders. These regulations can sometimes
impose significant limitations on our operations.

New laws and regulations or changes in existing laws and regulations or repeal
of existing laws and regulations may adversely impact our business.

Further, federal monetary policy, particularly as implemented through the
Federal Reserve System, significantly affects economic conditions for us.

NEW LEGISLATIVE AND REGULATORY PROPOSALS MAY AFFECT OUR OPERATIONS AND GROWTH.

Proposals to change the laws and regulations governing the operations and
taxation of, and federal insurance premiums paid by, banks and other financial
institutions and companies that control such institutions are frequently raised
in the U.S. Congress, the California legislature and before bank regulatory
authorities. The likelihood of any major changes in the future and the impact
such changes might have on us or our subsidiaries are impossible to determine.
Similarly, proposals to change the accounting treatment applicable to banks and
other depository institutions are frequently raised by the SEC, the federal
banking agencies, the IRS and other appropriate authorities. The likelihood and
impact of any additional future changes in law or regulation and the impact such
changes might have on us or our subsidiaries are impossible to determine at this
time.

RISKS ASSOCIATED WITH OUR STOCK.
--------------------------------

OUR STOCK TRADES LESS FREQUENTLY THAN OTHERS.


                                       25
<PAGE>
The Company's common stock is not listed on any exchange, nor is it included on
the NASDAQ National Market or the NASDAQ Small Cap Market.  However, trades may
be reported on the OTC Bulletin Board under the symbol "FMCB.OB".  Management is
aware that there are private transactions in the Company's common stock.
However, the limited trading market for the Company's common stock may make it
difficult for stockholders to dispose of their shares.

OUR STOCK PRICE IS AFFECTED BY A VARIETY OF FACTORS.

Stock price volatility may make it more difficult for you to resell your common
stock when you want and at prices you find attractive. Our stock price can
fluctuate significantly in response to a variety of factors discussed in this
section, including, among other things:

     -    Actual or anticipated variations in quarterly results of operations.

     -    Operating and stock price performance of other companies that
          investors deem comparable to our company.

     -    News reports relating to trends, concerns and other issues in the
          financial services industry.

     -    Perceptions in the marketplace regarding our company and/or its
          competitors.

OUR COMMON STOCK IS NOT AN INSURED DEPOSIT.  Our common stock is not a bank
deposit and, therefore, is not insured against loss by the FDIC, any other
deposit insurance fund or by any other public or private entity. Investment in
our common stock is inherently risky for the reasons described in this "Risk
Factors" section and elsewhere in this report and is subject to the same market
forces that affect the price of common stock in any company. As a result, if you
acquire our common stock, you may lose some or all of your investment.

ITEM 1B. UNRESOLVED STAFF COMMENTS
The Company has no unresolved comments received from staff at the SEC.

ITEM 2. PROPERTIES
Farmers & Merchants Bancorp along with its subsidiaries are headquartered in
Lodi, California.  Executive offices are located at 111 W. Pine Street.
Banking services are provided in nineteen locations in the Company's service
area. Of the nineteen locations, thirteen are owned and six are leased. The
expiration of these leases occurs between the years 2006 and 2015. See Note 15
to the Consolidated Financial Statements for more information concerning the
Company's lease obligations.

ITEM 3. LEGAL PROCEEDINGS
Certain lawsuits and claims arising in the ordinary course of business have been
filed or are 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 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of the Company's stockholders during the
fourth quarter of 2005.


                                       26
<PAGE>
PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
The common stock of Farmers & Merchants Bancorp is not widely held, is not
listed on any exchange, nor is it included on the NASDAQ National Market or the
NASDAQ Small Cap Market.  However, trades may be reported on the OTC Bulletin
Board under the symbol "FMCB.OB". Additionally, management is aware that there
are private transactions in the Company's common stock.

The following table summarizes the actual high and low sale prices for the
Company's common stock since the first quarter of 2004.  These figures are based
on activity posted on the OTC Bulletin Board and on private transactions between
individual shareholders that are reported to the Company.

<TABLE>
<CAPTION>
               CALENDAR QUARTER     HIGH   LOW
               ----------------     ----   ---
<S>                                 <C>    <C>
     2005      Fourth quarter       $ 500  $465
               Third quarter          515   465
               Second quarter         515   438
               First quarter          525   415

     2004      Fourth quarter       $ 455  $400
               Third quarter          425   375
               Second quarter         435   325
               First quarter          375   300
</TABLE>


As of February 28, 2006, there were approximately 1,404 shareholders of record
of the Company's common stock.

Beginning in 1975 and continuing through 2005, the Company has issued a 5% stock
dividend annually.  For information regarding cash dividends declared, refer to
the Five Year Financial Summary of Operations which appears in the Farmers &
Merchants Bancorp 2005 Annual Report to Shareholders, which is filed herewith as
Exhibit 13 and which is incorporated herein by reference.

There are limitations under Delaware corporate law as to the amounts of
dividends that may be paid by the Company. Additionally, if we decided to defer
interest on our subordinated debentures, we would be prohibited from paying cash
dividends on the Company's common stock. The Company is dependent on dividends
paid by the Bank to fund its dividend payments to its stockholders. There are
regulatory limitations on cash dividends that may be paid by the Bank under
state and federal laws.  See Item 1. Business - Supervision and Regulation.

During the second quarter of 2004, the Board of Directors of Farmers & Merchants
Bancorp approved a resolution authorizing the repurchase, from time to time, of
outstanding shares of the common stock of the Company. The Board of Directors
approved the repurchase program because it concluded that the Company has more
capital than it needs to meet present and anticipated regulatory guidelines for
the Bank to be classified as "well capitalized."

Repurchases will be made on the open market or through private transactions.
When the Company repurchases shares in private transactions the price is
determined based upon the most recent transactions that have occurred between
third party shareholders. This repurchase program was announced in a press
release dated June 21, 2004. The aggregate price to be paid by the Company for
all repurchased stock will not exceed $10,000,000 and the program will expire on
May 31, 2007. The repurchase program also requires that no purchases may be made
if the Bank would not remain "well-capitalized" after the repurchase. All shares
repurchased under the repurchase program will be retired.


                                       27
<PAGE>
The following table indicates the number of shares repurchased by Farmers &
Merchants Bancorp during the fourth quarter of 2005.

<TABLE>
<CAPTION>
                                      NUMBER OF SHARES    APPROXIMATE DOLLAR
                                      PURCHASED AS PART  VALUE OF SHARES THAT
                           AVERAGE      OF A PUBLICLY         MAY YET BE
               NUMBER OF  PRICE PER   ANNOUNCED PLAN OR   PURCHASED UNDER THE
PERIOD          SHARES      SHARE          PROGRAM          PLAN OR PROGRAM
-------------  ---------  ----------  -----------------  ---------------------
<S>            <C>        <C>         <C>                <C>
October 2005       1,406  $      493              1,406  $           4,137,600
November 2005        417         490                417              3,933,270
December 2005        100         490                100              3,884,270
-------------  ---------  ----------  -----------------  ---------------------
Total              1,923  $      492              1,923  $           3,884,270
</TABLE>

All of the above shares were repurchased in private transactions.

ITEM 6. SELECTED FINANCIAL DATA
The selected financial data for the five years ended December 31, 2005 appears
in the Five-Year Financial Summary in the Company's 2005 Annual Report to
Shareholders, which is filed herewith as Exhibit 13, and which is incorporated
herein by reference.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
See Management's Discussion and Analysis in the Company's 2005 Annual Report to
Shareholders which is filed herewith as Exhibit 13, and which is incorporated
herein by reference.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
See Management's Discussion and Analysis in the Company's 2005 Annual Report to
Shareholders which is filed herewith as Exhibit 13 and which is incorporated
herein by reference.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See Consolidated Financial Statements and the related Notes to Consolidated
Financial Statements in the Company's 2005 Annual Report to Shareholders which
is filed herewith as Exhibit 13, and which are incorporated herein by reference
(see table below).

<TABLE>
<CAPTION>
                                  FARMERS & MERCHANTS BANCORP
                           INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
                                AND FINANCIAL STATEMENT SCHEDULES
                                          IN EXHIBIT 13

                                                                                            PAGE
                                                                                            ----
<S>                                                                                         <C>
     Report of Management on Internal Control Over Financial Reporting                         1
     Reports of Independent Registered Public Accounting Firms                                 2
     Consolidated Financial Statements
          Consolidated Statements of Income - Years ended December 31, 2005, 2004 and 2003     5


                                       28
<PAGE>
          Consolidated Balance Sheets - December 31, 2005 and 2004                             6
          Consolidated Statements of Changes in Shareholders' Equity - Years ended
          December 31, 2005, 2004 and 2003                                                     7
          Consolidated Statements of Comprehensive Income.                                     8
          Consolidated Statements of Cash Flows - Years Ended December 31, 2005, 2004
          and 2003                                                                             9
     Notes to Consolidated Financial Statements                                               10
</TABLE>


ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None

ITEM 9A. CONTROLS AND PROCEDURES
Under the supervision and with the participation of management, including the
Company's Chief Executive Officer and Chief Financial Officer, the Company
conducted an evaluation of the effectiveness of our internal control over
financial reporting as of December 31, 2005 based on the framework in "Internal
Control - Integrated Framework" issued by the Committee of Sponsoring
Organizations of the Treadway Commission.  Based upon that evaluation,
management concluded that our internal control over financial reporting was
effective as of December 31, 2005.  Management's report on internal control over
financial reporting is set forth on page 1 in the Company's 2005 Annual Report,
which is included as Exhibit 13 to this report on Form 10-K, and is incorporated
herein by reference.  Management's assessment of the effectiveness of the
Company's internal control over financial reporting has been audited by
Perry-Smith LLP, the independent, registered public accounting firm that audited
the Company's 2005 Consolidated Financial Statements, as stated in its report,
which is set forth on page 2 in the Company's 2005 Annual Report which is
included as Exhibit 13 to this report on Form 10-K, and is incorporated herein
by reference.

ITEM 9B. OTHER INFORMATION
None

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
See "Election of Directors," "Executive Officers" and "Compliance with Section
16(a) of the Exchange Act" in the Company's definitive proxy statement for the
2006 Annual Meeting of Shareholders as filed with the Commission and which is
incorporated herein by reference.

The Company has adopted a Code of Conduct which complies with the Code of Ethics
requirements of the Securities and Exchange Commission.  A copy of the Code of
Conduct is posted on the Company's website.  The Company intends to disclose
promptly any amendment to, or waiver from any provision of, the Code of Conduct
applicable to senior financial officers, and any waiver from any provision of
the Code of Conduct applicable to Directors, on its website.  The Company's
website address is www.fmbonline.com.

ITEM 11. EXECUTIVE COMPENSATION
See "Compensation of Directors and Executive Officers," "Report of Personnel
Committee of the Board of Directors on Executive Compensation," "Deferred Bonus
Plan," "Executive Retention Plan," "Profit Sharing Plan," "Defined Benefit
Pension Plan", "Indexed Retirement Plan and Life Insurance Arrangements",
"Employment Contracts and Termination of Employment and Change in Control
Arrangements," "Compensation Committee Interlocks and Insider Participation" and
"Performance Graph" in the Company's definitive proxy statement for the 2006
Annual Meeting of Shareholders as filed with the Commission and which is
incorporated herein by reference.


                                       29
<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
See "Security Ownership of Certain Beneficial Owners and Management" in the
Company's definitive proxy statement for the 2006 Annual Meeting of Shareholders
as filed with the Commission and which is incorporated herein by reference.  The
Company does not have any equity compensation plans which require disclosure
under Item 201(d) of Regulation S-K.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
See "Employment Contracts and Termination of Employment and Change in Control
Arrangements" and "Certain Relationships and Related Transactions" in the
Company's definitive proxy statement for the 2006 Annual Meeting of Shareholders
as filed with the Commission and which is incorporated herein by reference.

ITEM 14.  PRINCIPAL ACCOUNTING FEES AND SERVICES
See "Audit and Non-Audit Fees" in the Company's definitive proxy statement for
the 2006 Annual Meeting of Shareholders as filed with the Commission and which
is incorporated herein by reference.

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

     (a)  (1) Financial Statements. Incorporated herein by reference, are listed
              in Item 8 hereof.
          (2) Financial Statement Schedules. None

     (b)  See Index to Exhibits on Page 32


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<PAGE>
SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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
                                        (Registrant)

                                   By    /s/ Stephen W. Haley
                                         ------------------------------
Dated:  March 10, 2006                   Stephen W. Haley
                                         Chief Financial Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has  been  signed below by the following persons on behalf of the registrant and
in  the  capacities  indicated  on  March  10,  2006.

/s/ Kent A. Steinwert
------------------------------                    President and
Kent A. Steinwert                                 Chief Executive Officer
                                                  (Principal Executive Officer)
/s/ Stephen W. Haley
------------------------------                    Executive Vice President &
Stephen W. Haley                                  Chief Financial Officer
                                                  (Principal Accounting Officer)

/s/ Ole R. Mettler                                /s/ James E. Podesta
------------------------------                    -----------------------------
Ole R. Mettler, Chairman                          James E. Podesta, Director

/s/ Stewart Adams, Jr.                            /s/ Kevin Sanguinetti
------------------------------                    -----------------------------
Stewart Adams, Jr., Director                      Kevin Sanguinetti, Director

/s/ Ralph Burlington                              /s/ Harry C. Schumacher
------------------------------                    -----------------------------
Ralph Burlington, Director                        Harry C. Schumacher, Director

/s/ Edward Corum, Jr.                             /s/ Calvin Suess
------------------------------                    -----------------------------
Edward Corum, Jr., Director                       Calvin Suess, Director

/s/ Robert F. Hunnell                             /s/ Carl Wishek, Jr.
------------------------------                    -----------------------------
Robert F. Hunnell, Director                       Carl Wishek, Jr., Director


                                       31
<PAGE>
<TABLE>
<CAPTION>
INDEX TO EXHIBITS
-----------------

Exhibit No.   Description
-----------   -----------
<S>           <C>
     2        Plan of Reorganization as filed on Form 8-K dated April 30, 1999, are incorporated herein by reference.
              Amended and Restated Certificate of Incorporation of Farmers & Merchants Bancorp, filed on Registrant's
     3(i)     Form 8-K dated April 30, 1999, is incorporated herein by reference.
              By-Laws of Farmers & Merchants Bancorp, filed on Registrant's Form 8-K dated April 30, 1999, is
     3(ii)    incorporated herein by reference.
              Deferred Bonus Plan of Farmers & Merchants Bank of Central California adopted as of March 2, 1999, filed
     10.3     on Registrant's Form 8-K dated April 30, 1999, is incorporated herein by reference.
              Amended and Restated Deferred Bonus Plan of Farmers & Merchants Bank of Central California, executed
     10.4     May 11, 1999, filed on Registrant's Form 8-K dated April 30, 1999, is incorporated herein by reference.
              Indexed Retirement Plan of Farmers & Merchants Bank of Central California adopted as of December, 2001,
              and implemented as of January 1, 2003, filed on Registrant's Form 10-K for the year ended December 31,
     10.8     2003, is incorporated herein by reference.
              Employment Agreement dated January 1, 2005, between Farmers & Merchants Bank of Central California
              and Kent A. Steinwert, filed on Registrant's Form 10-K for the year ended December 31, 2004, is
     10.9     incorporated herein by reference.
              Employment Agreement dated January 1, 2005, between Farmers & Merchants Bank of Central California
              and Chris C. Nelson, filed on Registrant's Form 10-K for the year ended December 31, 2004, is incorporated
     10.10    herein by reference.
              Employment Agreement dated January 1, 2005, between Farmers & Merchants Bank of Central California
              and Deborah E. Hodkin, filed on Registrant's Form 10-K for the year ended December 31, 2004, is
     10.11    incorporated herein by reference.
              Employment Agreement dated January 1, 2005, between Farmers & Merchants Bank of Central California
              and Kenneth W. Smith, filed on Registrant's Form 10-K for the year ended December 31, 2004, is
     10.12    incorporated herein by reference.
              Employment Agreement dated January 1, 2005, between Farmers & Merchants Bank of Central California
              and Richard S. Erichson, filed on Registrant's Form 10-K for the year ended December 31, 2004, is
     10.13    incorporated herein by reference.
              Employment Agreement dated January 1, 2005, between Farmers & Merchants Bank of Central California
              and Stephen W. Haley, filed on Registrant's Form 10-K for the year ended December 31, 2004, is
     10.14    incorporated herein by reference.
              2005 Deferred Bonus Plan of Farmers & Merchants Bank of Central California executed May 3, 2005, filed
     10.15    on Registrant's Form 10-Q for the quarter ended March 31, 2005, is incorporated herein by reference.
              Executive Retention Plan of Farmers & Merchants Bank of Central California executed May 3, 2005, filed
     10.16    on Registrant's Form 10-Q for the quarter ended March 31, 2005, is incorporated herein by reference.
              Amended and Restated Indexed Retirement Plan of Farmers & Merchants Bank of Central California
     10.17    adopted as of March 7, 2006.
     13       Annual Report to Shareholders of Farmers & Merchants Bancorp for the year ended December 31, 2005.
              Code of Conduct of Farmers & Merchants Bancorp, filed on Registrant's Form 10-K for the year ended
     14       December 31, 2003, is incorporated herein by reference.
              Letter regarding change in certifying accountant, filed on Registrant's Form 8-K/A dated March 17, 2005, is
     16.1     incorporated herein by reference.
              Letter regarding change in accounting principle, filed on Registrant's Form 10-K for the year ended
     18       December 31, 2004, is incorporated herein by reference.
              Subsidiaries of the Registrant, filed on Registrant's Form 10-K for the year ended December 31, 2003, is
     21       incorporated herein by reference.
     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.
              Certification of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350,
     32       as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
</TABLE>


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