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Item 9A. Controls and Procedures

2022-03-16 compared with 2021-03-15 · 141 added, 100 removed, 38 unchanged (86% of the section changed)

Controls and Procedures

The Company maintains controls and procedures designed to ensure that all relevant information is recorded and reported in all filings of financial reports.

Such information is reported to the Company’s management, including its Chief Executive Officer and its Chief Financial Officer to allow timely and accurate disclosure based on the definition of “disclosure controls and procedures” in Rule 13a-15(e).

In accordance with Rule 13a-15(b) of the Exchange Act, we carried out an evaluation as of December 31, 2019, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rule 13a-15(e) under the Exchange Act.

Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures are effective as of December 31, 2020.

There have been no significant changes in the Company’s internal controls or in other factors that could significantly affect the internal controls subsequent to the date the Company completed its evaluation.

Farmers & Merchants Bancorp

Report of Management on Internal Control Over Financial Reporting

Management of Farmers & Merchants Bancorp and Subsidiaries (the “Company”) is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, and for performing an assessment of the effectiveness of internal control over financial reporting as of December 31, 2020.

The Company’s internal control over financial reporting is a process designed under the supervision of the Company’s management, including the Chief Executive Officer and Chief Financial Officer, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States.

The Company’s system of internal control over financial reporting includes policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of assets of the Company;

(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company;

and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.

Management recognizes that there are inherent limitations in the effectiveness of any system of internal control, and accordingly, even effective internal control can provide only reasonable assurance with respect to financial statement preparation and fair presentation.

Further, because of changes in conditions, the effectiveness of internal control may vary over time.

Under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, the Company performed an assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2020 as described in “Internal Control-Integrated Framework (2013)” issued by the Committee of Sponsoring Organizations of the Treadway Commission .

As a result of this assessment, management has concluded that the Company’s internal control over financial reporting was effective as of December 31, 2020.

Moss Adams LLP, the independent registered public accounting firm that audited the financial statements included in this Annual Report, was engaged to express an opinion as to the fairness of presentation of such financial statements.

Moss Adams LLP was also engaged to audit the effectiveness of the Company’s internal control over financial reporting.

/s/ Stephen W.

Chairman, President & Chief Executive Officer

Executive Vice President & Chief Financial Officer

Evaluation of Disclosure Controls and Procedures

An evaluation was carried out under the supervision and with the participation of the Company’s management, including the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), of the effectiveness of the

disclosure controls and procedures (as required by Exchange Act Rules 240.13a-15(b) and 15d-14(a)).

Based on that evaluation, the CEO and CFO have concluded that as of the end of the period covered by this Report, the disclosure controls and

procedures are effective to provide reasonable assurance that information required to be disclosed by the Company in reports that are filed or submitted under the Exchange Act are recorded, processed, summarized and timely reported as provided in the

SEC’s rules and forms.

REPORT OF MANAGEMENT

To the Board of Directors and Shareholders of Farmers & Merchants Bancorp

The management of Farmers & Merchants Bancorp (the “Company”) is responsible for the preparation, integrity, and fair presentation of its published financial statements and all other information presented in this

annual report.

The financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and, as such, include amounts based on informed judgments and estimates made by management.

opinion of management, the financial statements and other information herein present fairly the financial condition and operations of the Company at the dates indicated in conformity with accounting principles generally accepted in the United States

Management is responsible for establishing and maintaining an effective system of internal control over financial reporting.

The internal control system is augmented by written policies and procedures and by audits

performed by an internal audit staff (assisted in certain instances by contracted external audit resources other than the independent registered public accounting firm), which reports to the Audit Committee of the Board of Directors.

auditors monitor the operation of the internal and external control system and report findings to management and the Audit Committee.

When appropriate, corrective actions are taken to address identified control deficiencies and other opportunities

for improving the system.

The Audit Committee provides oversight to the financial reporting process.

There are inherent limitations in the effectiveness of any system of internal control, including the possibility of human error and circumvention or

overriding of controls.

Accordingly, even an effective internal control system can provide only reasonable assurance with respect to financial statement preparation.

Further, because of changes in conditions, the effectiveness of an internal control

system may vary over time.

The Audit Committee of the Board of Directors is comprised entirely of outside directors who are independent of the Company’s management.

The Audit Committee is responsible for the selection of the independent

registered public accounting firm.

It meets periodically with management, the independent auditors and the internal auditors to ensure that they are carrying out their responsibilities.

The Audit Committee is also responsible for performing an oversight role by reviewing and monitoring the financial, accounting, and auditing procedures of the Company in addition to reviewing the Company’s financial

The independent auditors and the internal auditors have full and free access to the Audit Committee, with or without the presence of management, to discuss the adequacy of the internal control structure for financial reporting and any other

matters, which they believe should be brought to the attention of the Committee.

Chairman, President, and Chief Executive Officer

Executive Vice President and Chief Financial Officer

MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Farmers & Merchants Bancorp management is responsible for establishing and maintaining effective internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange

Act of 1934, as amended.

The Company’s internal control over financial reporting is designed by, or under the supervision of the Company’s Chief Executive Officer and Chief Financial Officer and effected by Management, and other personnel, to

provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

Company’s internal control over financial reporting includes those policies and procedures that:

Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;

Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of the Company are being made only in accordance with

authorizations of management and directors of the Company;

Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.

There are inherent limitations in any internal control, no matter how well designed and misstatements due to error or fraud may occur and not be detected, including the possibility of circumvention or overriding of

Accordingly, even an effective internal control system can provide only reasonable assurance with respect to financial statement preparation.

Further, because of changes in conditions, the effectiveness of an internal control system may

vary over time.

Management assessed the effectiveness of the internal control structure over financial reporting as of December 31, 2021.

This assessment was based on criteria for effective internal control over financial reporting

set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).

Based on this assessment, management believes that the Company’s internal control over financial reporting is effective as of December 31, 2021.

The Company’s independent registered public accounting firm has audited the consolidated financial statements for the year ended December 31, 2021, has issued an audit report on the Company’s internal control over

financial reporting.

Such audit report expresses an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting in accordance with the standards of the Public Company Accounting Oversight Board as of December

31, 2021 that appears on page 72.

Changes in Internal Controls

There have not been any changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the year ended December 31, 2021, to

which this report relates that have materially affected, or are reasonably likely to materially affect the Company’s internal control over financial reporting.

Other Information

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Not Applicable

Directors, Executive Officers and Corporate Governance

Set forth below is certain information regarding the Executive Officers of the Company and/or Bank:

Name and Position(s)

Principal Occupation during the Past Five Years

Chairman, President

& Chief Executive Officer

of the Company and Bank

Chairman, President & Chief Executive Officer of the Company and Bank.

Executive Vice President & Chief Administrative Officer of the Bank

Executive Vice President & Chief Administrative Officer of the Bank.

Executive Vice President

& Chief Financial Officer & Secretary of the Company and

Executive Vice President & Chief Financial Officer of the Company and Bank.

Executive Vice President

& Senior Credit Officer

of the Company and Bank

Executive Vice President & Senior Credit Officer of the Company and Bank.

Executive Vice President,

Wholesale Banking Division

Executive Vice President, Wholesale Banking Division of the Bank since May 2017.

Senior Vice President – Northern California Regional Executive – Umpqua Bank, April 2014 – May 2017.

Executive Vice President,

Wholesale Banking Division

Executive Vice President, Wholesale Banking Division of the Bank.

Executive Vice President,

Retail Banking Division of the Bank

Executive Vice President, Retail Banking Division of the Bank.

Also, see “Election of Directors” and “Compliance with Section 16(a) of the Exchange Act” in the Company’s definitive proxy statement for the 2021 Annual Meeting of Stockholders which will be filed with the SEC and which is incorporated herein by reference.

During 2020, there were no changes in procedures for the election of directors.

The Company has adopted a Code of Conduct, which complies with the Code of Ethics requirements of the SEC.

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 on the About Us page.

The Company’s website address is www.fmbonline.com.

This website address is for information only and is not intended to be an active link, or to incorporate any website information into this document.

Information regarding “Directors and Executive Officers” is set forth under the headings “Election of Directors” and “Management – Executive Officers who are not Directors” of the Company’s 2022 Annual Meeting Proxy

Statement (“Proxy Statement”) and is incorporated herein by reference.

Information regarding “Delinquent Section 16(a) Reports” is set forth under the section “Delinquent Section 16(a) Reports” of the Company’s Proxy Statement and is incorporated herein by reference.

Information regarding the Company’s corporate governance and board committees is set forth under the heading “Meetings and Committees of the Board of Directors – Committee Membership” in the Company’s Proxy Statement

and is incorporated by reference.

Consistent with the requirements of the Sarbanes-Oxley Act, the Company has a Code of Conduct applicable to senior financial officers including the principal executive officer, principal financial officer and principal

accounting officer.

The Code of Conduct can be accessed electronically by visiting the Company’s website at www.fmbonline.com .

The Company intends to satisfy the disclosure requirements under Item 5.05 of Form 8-K regarding amendments to and

waivers of the Code of Conduct by porting such information on its website, at the address and location specified above.

Executive Compensation

The information required by Item 11 of Form 10-K is incorporated by reference from the information contained in the Company’s definitive proxy statement for the 2021 Annual Meeting of Stockholders, which will be filed pursuant to Regulation 14A.

Information regarding “Executive Compensation” is set forth under the headings “Director Compensation” and “Executive Compensation” of the Company’s Proxy Statement and is incorporated herein by reference.

Information regarding “Compensation Committee Interlocks and Insider Participation” is set forth under such heading of the Company’s Proxy Statement and is incorporated herein by reference.

Information regarding the “Compensation Committee Report” is set forth under the heading “Report of the Personnel Committee of the Board of Directors on Executive Compensation” of the Company’s Proxy Statement and is

incorporated herein by reference.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information required by Item 12 of Form 10-K is incorporated by reference from the information contained in the Company’s definitive proxy statement for the 2021 Annual Meeting of Stockholders, which will be filed pursuant to Regulation 14A.

The Company does not have any equity compensation plans, which require disclosure under Item 201(d) of Regulation S-K.

Information regarding “Security Ownership of Certain Beneficial Owners and Management” is set forth under such heading of the Company’s Proxy Statement and is incorporated herein by reference.

Information regarding “Equity Compensation Plan Information” is set forth under the heading “Equity Compensation Plan Information” of the Company’s Proxy Statement and is incorporated herein by reference.

Certain Relationships and Related Transactions, and Director Independence

The information required by Item 13 of Form 10-K is incorporated by reference from the information contained in the Company’s definitive proxy statement for the 2021 Annual Meeting of Stockholders, which will be filed pursuant to Regulation 14A.

Information regarding “Certain Relationships and Related Transactions, and Director Independence” is set forth under the heading “Certain Relationships and Related Person Transactions” and “Corporate Governance –

Director Independence” of the Company’s Proxy Statement and is incorporated herein by reference.

Principal Accounting Fees and Services

The information required by Item 14 of Form 10-K is incorporated by reference from the information contained in the Company’s definitive proxy statement for the 2021 Annual Meeting of Stockholders, which will be filed pursuant to Regulation 14A.

Exhibits, Financial Statement Schedules

Financial Statements.

Incorporated herein by reference, are listed in Item 8 hereof.

(2) Financial Statement Schedules.

Not applicable.

(3) Exhibits.

Amended Certificate of Incorporation (incorporated by reference to Proposal #2 in the Registrant’s Definitive Proxy Statement on Schedule 14A for its 2012 Annual Meeting of Stockholders , Appendices 1 and 2 to the Registrant's Definitive Proxy Statement on Schedule 14A for its 2007 Annual Meeting of Stockholders , and Exhibit 3(i) to the Registrant's Current Report on Form 8-K dated April 30, 1999) .

Amended By-Laws (incorporated by reference to the Registrant’s Current Report on Form 8-K dated April 4, 2016 , the Registrant’s Current Report on Form 8-K dated September 19, 2008 , Appendix 3 to the Registrant's Definitive Proxy Statement on Schedule 14A for its 2007 Annual Meeting of Stockholders , Exhibit 3.1 to the Registrant's Current Report on Form 8-K dated June 7, 2005 , and Exhibit 3(ii) to the Registrant's Current Report on Form 8-K dated April 30, 1999) .

Certificate of Designation for the Series A Junior Participating Preferred Stock (included as Exhibit A to the Rights Agreement between Farmers & Merchants Bancorp and Registrar and Transfer Company, dated as of August 5, 2008, filed as Exhibit 4.1 below), filed on the Registrant’s Form 10-Q for the quarter ended June 30, 2008, is incorporated herein by reference.

Rights Agreement between Farmers & Merchants Bancorp and Registrar and Transfer Company , dated as of August 5, 2008, including Form of Right Certificate attached thereto as Exhibit B, filed on the Registrant’s Form 10-Q for the quarter ended June 30, 2008, is incorporated herein by reference.

Information regarding “Principal Accounting Fees and Services” is set forth under the heading “Auditors – Fees Paid to Independent Registered Public Accounting Firm” of the Company’s Proxy Statement and is incorporated

herein by reference.

List of Financial Statements and Financial Statement Schedules

(a) The following documents are filed as a part of this Annual Report on Form 10-K:

(1) Financial Statements and

(2) Financial Statement schedules required to be filed by Item 8 of this Annual Report on Form 10-K.

(3) The following exhibits are required by Item 601 of Regulation S-K and are included as part of this Annual Report on Form 10-K:

Amended Certificate of Incorporation (incorporated by reference to Proposal #2 in the Registrant’s Definitive

Proxy Statement on Schedule 14A for its 2012 Annual Meeting of Stockholders , Appendices 1 and 2 to the Registrant’s Definitive Proxy Statement

on Schedule 14A for its 2007 Annual Meeting of Stockholders , and Exhibit 3(i) to the Registrant’s Current Report on Form 8-K dated April 30, 1999) .

Amended By-Laws (incorporated by reference to the Registrant’s Current Report on Form 8-K dated April 4, 2016 ,

the Registrant’s Current Report on Form 8-K dated September 19, 2008 , Appendix 3 to the Registrant’s Definitive Proxy Statement on Schedule 14A for its 2007 Annual Meeting of Stockholders , Exhibit 3.1 to the Registrant’s Current Report on Form 8-K dated June 7, 2005 , and Exhibit 3(ii) to the Registrant’s Current Report on Form 8-K dated April 30, 1999) .

Certificate of Designation for the Series A Junior Participating Preferred

Stock (included as Exhibit A to the Rights Agreement between Farmers & Merchants Bancorp and Registrar and Transfer Company, dated as of August 5, 2008, filed as Exhibit 4.1 below), filed on

the Registrant’s Form 10-Q for the quarter ended June 30, 2008, is incorporated herein by reference.

Rights Agreement between Farmers & Merchants Bancorp and Registrar and

Transfer Company , dated as of August 5, 2008, including Form of Right Certificate attached thereto as Exhibit B, filed on the Registrant’s Form 10-Q for the quarter ended June 30, 2008, is

incorporated herein by reference.

Amendment No.

1 to Rights Agreement between Farmers & Merchants Bancorp and Computershare Trust, N.A., as Rights Agent , dated as of February 18, 2016, incorporated herein by reference to Exhibit 4.2 of the Registrant’s Form 8-A/A filed on February 19, 2016.

1 to Rights Agreement between Farmers & Merchants Bancorp

and Computershare Trust, N.A., as Rights Agent , dated as of February 18, 2016, incorporated herein by reference to Exhibit 4.2 of the Registrant’s Form 8-A/A filed on February 19, 2016.

Description of F&M Bancorp Capital Stock , filed on Registrant’s Form 10-K for the year ended December 31, 2019.

Amended and Restated Employment Agreement effective August 1, 2019, between Farmers & Merchants Bank of Central California and Kent A.