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Item 9A. Controls and Procedures

2023-03-15 compared with 2022-03-16 · 99 added, 103 removed, 76 unchanged (73% of the section changed)

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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.

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

this annual report.

In the 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 of America.

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 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.

Internal 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.

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.

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.

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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.

financial reports.

reporting and any other matters, which they believe should be brought to the attention of the Committee.

/s/ Stephen W.

Chairman, President, and Chief Executive Officer

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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:

Exchange Act of 1934, as amended.

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”).

The 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;

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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.

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, 2022.

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”).

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,

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.

The Company’s independent registered public accounting firm has audited the consolidated financial statements for the year ended December 31, 2022, has issued an audit report on the Company’s internal control

over financial reporting.

December 31, 2022 that appears on page 71.

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.

2022, 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

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Directors, Executive Officers and Corporate Governance

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.

Information regarding “Directors and Executive Officers” is set forth under the headings “Annual Meeting Business Matters – Proposal No.

1 – Election of Directors” and “Executive Compensation – Compensation

Discussion and Analysis – Named Executive Officers Who Are Not Directors” of the Company’s 2023 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 “Other Matters – 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 “Corporate Governance – Board of Directors Meetings” and “ – Committees of the Board” in the Company’s

Proxy Statement and is incorporated by reference.

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.

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 posting such information on its website, at the address and location specified above.

Executive Compensation

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.

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

the Company’s Proxy Statement and is incorporated herein by reference.

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

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.

Information regarding “Equity Compensation Plan Information” is set forth under the heading “Executive Compensation – Qualified and Non-Qualified Retirement Programs” of the Company’s Proxy Statement and is

incorporated herein by reference.

Certain Relationships and Related Transactions, and Director Independence

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 –

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

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

Principal Accounting Fees and Services

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.

Information regarding “Principal Accounting Fees and Services” is set forth under the heading “Fees and Services of 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:

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

Financial Statements and

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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.

Amended and Restated Certificate of Incorporation filed on Registrant’s Form 10-K for the year ended December 31, 2022.

Amended and Restated By-Laws filed on Registrant’s Form 10-K for the year ended December 31, 2022.

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.