FORM 10-Q
                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


               QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934


                  For the quarterly period ended June 30, 2002


For Quarter Ended June 30, 2002             Commission File Number: 1.000-26099


                           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.)

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

Registrant's telephone number, including area code (209) 334-1101

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
                                    -------          -------

Number of shares of common stock of the registrant: Par value $0.01, authorized
2,000,000 shares; issued and outstanding 735,673 as of July 25, 2002.







                           FARMERS & MERCHANTS BANCORP


                                    FORM 10-Q
                                TABLE OF CONTENTS




PART I. - FINANCIAL INFORMATION                                          Page

     Item 1 - Financial Statements

         Consolidated Balance Sheets as of June 30, 2002,
         December 31, 2001 and June 30, 2001.                              3

         Consolidated Statements of Income for the Three Months
         and Six Months Ended June 30, 2002 and 2001.                      4

         Consolidated Statements of Comprehensive Income for the Three
         Months and Six Months Ended June 30, 2002 and 2001.               5

         Statement of Changes in Shareholders' Equity for the Six
         Months Ended June 30, 2002 and 2001.                              6

         Consolidated Statement of Cash Flows for the Six
         Months Ended June 30, 2002 and 2001.                              7

         Notes to Consolidated Financial Statements                        8

     Item 2 - Management's Discussion and Analysis                        10


PART II. - OTHER INFORMATION                                              22
           -----------------

SIGNATURES                                                                24
- ----------


Index to Exhibits                                                         25


                                       2



PART I. - FINANCIAL INFORMATION

Item 1 -  Financial Statements

FARMERS & MERCHANTS BANCORP
Consolidated Balance Sheets


- -------------------------------------------------------------------------------------------------------------------
(in thousands)                                                                June 30,     December 31,    June 30,
                                                                                2002           2001          2001
Assets                                                                      (Unaudited)                  (Unaudited)
- -------------------------------------------------------------------------------------------------------------------
                                                                                                  
Cash and Cash Equivalents:
  Cash and Due From                                                           $31,201        $32,406       $39,599
  Federal Funds Sold                                                            5,985         31,100        40,200
- -------------------------------------------------------------------------------------------------------------------
    Total Cash and Cash Equivalents                                            37,186         63,506        79,799

Investment Securities:
  Available-for Sale                                                          166,128        242,852       261,180
  Held-to-Maturity                                                             29,846         32,698        35,952
- -------------------------------------------------------------------------------------------------------------------
    Total Investment Securities                                               195,974        275,550       297,132
- -------------------------------------------------------------------------------------------------------------------

Loans                                                                         659,923        603,185       529,334
  Less: Unearned Income                                                        (1,546)        (1,016)         (500)
  Less: Allowance for Loan Losses                                             (13,093)       (12,709)      (12,655)
- -------------------------------------------------------------------------------------------------------------------
    Loans, Net                                                                645,284        589,460       516,179
- -------------------------------------------------------------------------------------------------------------------
Land, Buildings & Equipment                                                    11,511         11,432        11,108
Interest Receivable and Other Assets                                           40,328         30,935        11,238
- -------------------------------------------------------------------------------------------------------------------
    Total Assets                                                             $930,283       $970,883      $915,456
===================================================================================================================

Liabilities & Shareholders' Equity
Deposits:
  Demand                                                                     $172,540       $198,316      $161,136
  Interest Bearing Transaction                                                 84,259        100,574        76,781
  Savings                                                                     219,608        198,651       185,086
  Time Deposits                                                               303,679        322,170       345,783
- -------------------------------------------------------------------------------------------------------------------
    Total Deposits                                                            780,086        819,711       768,786
- -------------------------------------------------------------------------------------------------------------------

Fed Funds Purchased/Borrowings                                                 40,983         41,000        41,017
Other Liabilities                                                               8,061          9,436         8,536
- -------------------------------------------------------------------------------------------------------------------
    Total Liabilities                                                         829,130        870,147       818,339
- -------------------------------------------------------------------------------------------------------------------

Shareholders' Equity
  Common Stock                                                                      7              7             7
  Additional Paid In Capital                                                   65,661         61,360        61,762
  Retained Earnings                                                            32,644         36,499        32,900
  Accumulated Other Comprehensive Income                                        2,841          2,870         2,448
- -------------------------------------------------------------------------------------------------------------------
    Total Shareholders' Equity                                                101,153        100,736        97,117
- -------------------------------------------------------------------------------------------------------------------
    Total Liabilities & Shareholders' Equity                                 $930,283       $970,883      $915,456
===================================================================================================================

     The accompanying notes are an integral part of these consolidated financial
statements

                                       3



FARMERS & MERCHANTS BANCORP
Consolidated Statements of Income  (Unaudited)


- -----------------------------------------------------------------------------------------------------------------------------
(in thousands)                                                                    Three Months               Six Months
                                                                                 Ended June 30,             Ended June 30,
                                                                              2002          2001         2002          2001
- -----------------------------------------------------------------------------------------------------------------------------
                                                                                                         
Interest Income:
  Interest & Fees on Loans                                                  $10,226       $11,485      $20,128       $22,743
  Federal Funds Sold                                                            187           500          330         1,102
  Securities:
    Investments Available-for-Sale:
      Taxable                                                                 2,541         3,861        5,573         7,848
      Non-taxable                                                               240           215          477           450
    Investments Held-to-Maturity:
      Taxable                                                                     8            65           18           153
      Non-taxable                                                               352           413          713           833
- -----------------------------------------------------------------------------------------------------------------------------
      Total Interest Income                                                  13,554        16,539       27,239        33,129
- -----------------------------------------------------------------------------------------------------------------------------
Interest Expense:
  Interest Bearing Transaction                                                   75           166          164           348
  Savings                                                                       528           927        1,140         1,870
  Time Deposits                                                               2,264         4,355        4,897         9,072
   Interest on Borrowed Funds                                                   556           557        1,106         1,110
- -----------------------------------------------------------------------------------------------------------------------------
      Total Interest Expense                                                  3,423         6,005        7,307        12,400
- -----------------------------------------------------------------------------------------------------------------------------

Net Interest Income                                                          10,131        10,534       19,932        20,729
Provision for Loan Losses                                                       300           300          500           600
- -----------------------------------------------------------------------------------------------------------------------------
Net Interest Income After Provision for Loan Losses                           9,831        10,234       19,432        20,129
- -----------------------------------------------------------------------------------------------------------------------------

Non-Interest Income
  Service Charges on Deposit Accounts                                         1,155         1,059        2,244         1,956
  Net Gain (Loss) on Sale of Investment Securities                              232           (22)         276            66
  Other                                                                       1,564           996        2,635         1,784
- -----------------------------------------------------------------------------------------------------------------------------
      Total Non-Interest Income                                               2,951         2,033        5,155         3,806
- -----------------------------------------------------------------------------------------------------------------------------

Non-Interest Expense
  Salaries & Employee Benefits                                                4,568         4,674        8,748         8,742
  Occupancy                                                                     422           375          835           813
  Equipment                                                                     559           448        1,192           963
  Other Operating                                                             2,010         1,577        3,730         3,276
- -----------------------------------------------------------------------------------------------------------------------------
      Total Non-Interest Expense                                              7,559         7,074       14,505        13,794
- -----------------------------------------------------------------------------------------------------------------------------

Net Income Before Taxes                                                       5,223         5,193       10,082        10,141
Provision for Taxes                                                           1,903         2,032        3,700         3,940
- -----------------------------------------------------------------------------------------------------------------------------
    Net Income                                                               $3,320        $3,161       $6,382        $6,201
=============================================================================================================================

Earning Per Share                                                            $ 4.51        $ 4.18        $8.61         $8.21
=============================================================================================================================

     The accompanying notes are an integral part of these consolidated financial
statements

                                       4


FARMERS & MERCHANTS BANCORP
Consolidated Statements of Comprehensive Income  (Unaudited)


- ---------------------------------------------------------------------------------------------------------------------------
(in  thousands)                                                                  Three Months Ended      Six Months Ended
                                                                                 June 30,   June 30,    June 30,   June 30,
                                                                                   2002       2001        2002       2001
- ---------------------------------------------------------------------------------------------------------------------------
                                                                                                       
      Net Income                                                                 $ 3,320     $ 3,161    $ 6,382    $ 6,201

      Other Comprehensive Income (Loss) -
          Unrealized holding gains (losses) arising during the period, net of
          income tax effects of $(269) and $(317) for the quarters ended
         June 30, 2002 and 2001, respectively, and of $(57) and $(1,203)
          for the six months ended June 30, 2002 and 2001, respectively.             371         454        (25)     1,718

          Less: Reclassification adjustment for realized (gains) losses included
           in net income, net of related income tax effects of $0 and $7
          for the quarters ended June 30, 2002 and 2001, respectively, and of
         $(2) and $45 for the six months ended June 30, 2002 and 2001,
         respectively.                                                                (8)        (10)        (4)       (60)

- ---------------------------------------------------------------------------------------------------------------------------
                Total Other Comprehensive Income                                     363         444        (29)     1,658
- ---------------------------------------------------------------------------------------------------------------------------

      Comprehensive Income                                                       $ 3,683     $ 3,605    $ 6,353    $ 7,859
===========================================================================================================================

     The accompanying notes are an integral part of these consolidated financial
statements

                                       5



FARMERS & MERCHANTS BANCORP
Consolidated Statements of Changes in Shareholders' Equity  (Unaudited)


- -------------------------------------------------------------------------------------------------------------------
(in thousands except share data)                                                         Accumulated
                                             Common               Additional                Other          Total
                                             Shares      Common    Paid-In   Retained   Comprehensive  Shareholders'
                                           Outstanding    Stock    Capital   Earnings      Income          Equity
- -------------------------------------------------------------------------------------------------------------------
                                                                                        
Balance, December 31, 2000                   687,491       $ 7   $ 53,559  $ 36,527         $   790       $ 90,883
===================================================================================================================
Net Income                                                   -          -     6,201               -          6,201
Cash Dividends Declared on                                                                                       -
   Common Stock                                              -          -    (1,406)              -         (1,406)
5% Stock Dividend                             33,831         -      8,288    (8,288)              -              -
Cash Paid in Lieu of Fractional
   Shares Related to Stock Dividend                          -          -      (134)              -           (134)
Redemption of Stock                             (344)        -        (85)        -               -            (85)
Changes in Net Unrealized Gain (Loss) on
   Securities Available for Sale                             -          -         -           1,658          1,658
- -------------------------------------------------------------------------------------------------------------------
Balance, June 30, 2001                       720,978       $ 7   $ 61,762  $ 32,900        $  2,448       $ 97,117
===================================================================================================================


- -------------------------------------------------------------------------------------------------------------------
Balance, December 31, 2001                   719,269       $ 7   $ 61,360  $ 36,499        $  2,870       $100,736
===================================================================================================================
Net Income                                                   -          -     6,382               -          6,382
Cash Dividends Declared on                                                                                       -
   Common Stock                                              -          -    (1,472)              -         (1,472)
5% Stock Dividend                             34,501         -      8,625    (8,625)              -              -
Cash Paid in Lieu of Fractional
   Shares Related to Stock Dividend                          -          -      (140)              -           (140)
Redemption of Stock                          (18,021)        -     (4,324)        -               -         (4,324)
Changes in Net Unrealized Gain (Loss) on
   Securities Available for Sale                             -          -         -             (29)           (29)
- -------------------------------------------------------------------------------------------------------------------
Balance, June 30, 2002                       735,749       $ 7   $ 65,661  $ 32,644        $  2,841       $101,153
===================================================================================================================

The accompanying notes are an integral part of these consolidated financial
statements

                                       6


FARMERS & MERCHANTS BANCORP
Consolidated Statement of Cash Flows (Unaudited)


(in thousands)                                                                      Six Months Ended
                                                                                  June 30,     June 30,
                                                                                    2002         2001
- -------------------------------------------------------------------------------------------------------
                                                                                          
Operating Activities:
 Net Income                                                                        $6,382       $6,201
 Adjustments to Reconcile Net Income to Net
   Cash Provided by (Used in) Operating Activities:
     Provision for Loan Losses                                                        500          600
     Depreciation and Amortization                                                    407          757
     Provision for Deferred Income Taxes                                              (20)        (480)
     Net Accretion of Investment Securities                                           (75)        (229)
     Net (Gain) on Sale of Investment Securities                                     (315)         (88)
 Net Change in Operating Assets & Liabilities:
      (Increase) Decrease in Interest Receivable and Other Assets                  (9,428)       2,129
      Decrease in Interest Payable and Other Liabilities                           (1,375)        (421)
- -------------------------------------------------------------------------------------------------------
          Net Cash Provided by (Used in) Operating Activities                      (3,924)       8,469

Investing Activities:
  Securities Available-for-Sale:
    Purchased                                                                     (10,694)     (11,011)
    Sold or Matured                                                                87,808       31,677
  Securities Held-to-Maturity:
    Purchased                                                                        (249)         (60)
    Matured                                                                         3,127        5,534
  Net Loans Originated or Acquired                                                (56,478)     (31,627)
  Principal Collected on Loans Charged Off                                            154          369
  Net Additions to Premises and Equipment                                            (486)        (309)
- -------------------------------------------------------------------------------------------------------
          Net Cash Provided by (Used by) Investing Activities                      23,182       (5,427)

Financing Activities:
  Net Decrease in Demand, Interest-Bearing Transaction,
          and Savings Accounts                                                    (21,134)     (17,187)
  Increase (Decrease) in Time Deposits                                            (18,491)      21,295
  Federal Home Loan Bank Borrowings:
          Advances                                                                      -            -
          Paydowns                                                                    (17)         (16)
  Cash Dividends                                                                   (1,612)      (1,540)
  Stock Redemption                                                                 (4,324)         (85)
- -------------------------------------------------------------------------------------------------------
Net Cash Provided by (Used in) Financing Activities                               (45,578)       2,467

Increase (Decrease) in Cash and Cash Equivalents                                  (26,320)       5,509

Cash and Cash Equivalents at Beginning of Year                                     63,506       74,290
- -------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents as of June 30, 2002 and June 30, 2001                   $37,186      $79,799
=======================================================================================================

The accompanying notes are an integral part of these consolidated financial
statements

                                       7


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.  Earnings per Share
The actual number of shares outstanding at June 30, 2002, were 735,749. Basic
earnings per share is calculated on the basis of the weighted average number of
shares outstanding during the period. Weighted average number of shares for the
six months ending June 30, 2002 and 2001 were 741,417 and 755,721, respectively.
Earnings per share for the six months ending June 30, 2002 and 2001 were $8.61
and $8.21, respectively. Prior periods per share amounts have been restated for
the 5% stock dividend declared during 2002 and 2001.

2.  Basis of Presentation
The accompanying financial statements include the accounts of Farmers &
Merchants Bancorp and the Bancorp's wholly owned subsidiary, Farmers & Merchants
Bank. Farmers & Merchants Bancorp was organized effective April 30, 1999. The
foregoing financial statements are unaudited, however, in the opinion of
Management, all adjustments (comprised only of normal recurring accruals)
necessary for a fair presentation of the financial statements have been
included. Certain reclassifications may have been made in the 2001 financial
information to conform to the presentation used in 2002 and all material
intercompany transactions have been eliminated in consolidation. The results for
the six months ended June 30, 2002, are not necessarily indicative of results
which may be expected for any other interim period or for the year as a whole.
The unaudited consolidated financial statements presented herein should be read
in conjunction with the Company's consolidated financial statements and notes
included in the Company's Annual Report on Form 10-K for the year ended December
31, 2001.

3.  Impact of Recently Issued Accounting Standards
In June 2001, the FASB issued Statement No. 143, Accounting for Asset Retirement
Obligations. This Statement addresses financial accounting and reporting for
obligations associated with the retirement of tangible long-lived assets and the
associated asset retirement costs. This Statement requires that the fair value
of a liability for an asset retirement obligation be recognized in the period in
which it is incurred if a reasonable estimate of fair value can be made. The
associated asset retirement costs are capitalized as part of the carrying amount
of the long-lived asset.

This Statement is effective for financial statements issued for fiscal years
beginning after June 15, 2002. The Company does not anticipate that the adoption
of Statement No. 143 will have a material impact on the financial condition or
operating results of the Company.

In April 2002, the FASB issued Statement No. 145, Rescission of FASB Statements
No. 4, 44 and 64, Amendment of FASB Statement No. 13, and Technical Corrections.
This Statement rescinds FASB Statement No. 4, Reporting Gains and Losses from
Extinguishment of Debt, and an amendment of that Statement, FASB Statement No.
64, Extinguishments of Debt Made to Satisfy Sinking-Fund Requirements. This
Statement also rescinds FASB Statement No. 44, Accounting for Intangible Assets
of Motor Carriers. This Statement amends FASB Statement No. 13, Accounting for
Leases, to eliminate an inconsistency between the required accounting for
sale-leaseback transactions and the required accounting for certain lease
modifications that have economic effects that are similar to sale-leaseback
transactions. This Statement also amends other existing authoritative
pronouncements to make various technical corrections, clarify meanings, or
describe their applicability under changed conditions.

The provisions of this Statement related to the rescission of Statement 4 shall
be applied in fiscal years beginning after May 15, 2002. The provisions of this
Statement related to Statement 13 shall be effective for transactions occurring
after May 15, 2002. All other provisions of this statement shall be effective


                                       8


3. Impact of Recently Issued Accounting Standards (Cont'd)

for financial statements issued on or after May 15, 2002. The Company does not
anticipate that the adoption of Statement No. 145 will have a material impact on
the financial condition or operating results of the Company.


                                       9


ITEM 2.

Management's Discussion and Analysis
Forward -Looking Statements
This report 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, real estate, consumer, and
other lending activities; (iv) changes in federal and state Banking regulations
and; (v) other external developments which could materially impact the Company's
operational and financial performance. 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.

Introduction
The following discussion and analysis is intended to provide a better
understanding of the Company's performance during the first six months of 2002
and the material changes in financial condition, operating income and expense of
the Company and its subsidiary as shown in the accompanying financial
statements. This section should be read in conjunction with the Company's
consolidated 2001 financial statements and the notes thereto, along with other
financial information included in this report.

Overview
For the six months ended June 30, 2002, Farmers & Merchants Bancorp reported net
income of $6,382,000, earnings per share of $8.61, return on average assets of
1.37% and return on average shareholders' equity (net of accumulated other
comprehensive income) of 13.08%. For the six months ending June 30, 2001, net
income totaled $6,201,000, earnings per share was $8.21, return on average
assets was 1.39% and the return on average shareholders' equity (net of
accumulated other comprehensive income) totaled 13.24%.

The Company's improved earnings performance in 2002 was due to a combination of
change in asset mix, improvement in non-interest income due to a securities gain
of $200 thousand over prior period, control of non-interest expense and a
reduction of the effective tax rate.

The following is a summary of the financial results for the six-month period
ending June 30, 2002 compared to June 30, 2001.

o Net income for the period totaled $6.4 million, up 2.9% over one year ago.

o Net interest income decreased 3.8% to $19.9 million from $20.7 million.

o The provision for loan losses totaled $500 thousand for the period compared to
$600 thousand one year ago.

                                       10


o Non-interest income increased 35.4% to $5.2 million, from the $3.8 million
reported for 2001.

o Non-interest expense increased 5.2% to $14.5 million, from $13.8 million in
2001.

o Total assets increased 1.6% to $930.3 million.

o Gross loans increased 24.7% to $659.9 million, an increase of $130.6 million.

o Total deposits increased 1.5% to $780.1 million.

o Investment securities totaled $196.0 million from $297.1 million at June 30,
2001.

o Total shareholders' equity increased $4.0 million to $101.2 million.

Net Interest Income
Net interest income is the amount by which the interest and fees on loans and
interest earning assets exceed the interest paid on interest bearing sources of
funds. For the purpose of analysis, the interest earned on tax-exempt
investments and municipal loans is adjusted to an amount comparable to interest
subject to normal income taxes. This adjustment is referred to as "taxable
equivalent" and is noted wherever applicable. Interest income and expense are
affected by changes in the volume and mix of average interest earning assets and
average interest bearing liabilities, as well as fluctuations in interest rates.
Therefore, increases or decreases in net interest income are analyzed as changes
in volume, changes in rate and changes in the mix of assets and liabilities.

Net interest income declined 3.8% to $19.9 million during the first six months
of 2002, compared to $20.7 million at June 30, 2001. On a fully taxable
equivalent basis, net interest income decreased 3.9% and totaled $20.6 million
at June 30, 2002, compared to $21.4 million for the first six months of 2001.
Net interest income on a taxable equivalent basis, expressed as a percentage of
average total earning assets, is referred to as the net interest margin, which
represents the average net effective yield on earning assets. For the six months
ended June 30, 2002, the net interest margin was 4.8% compared to 5.1% for the
same period in 2001. The decrease in net interest margin was primarily related
to the drop in interest rates since the first six months of 2001 as the
Company's assets reprice more quickly than the liabilities.

Loans, the Company's highest earning asset, increased $130.6 million as of June
30, 2002 compared to June 30, 2001. On an average balance basis, loans increased
by $103.4 million. Due to the decline in interest rates during 2001, the yield
on the loan portfolio decreased 246 basis points to 6.8% for the six months
ending June 30, 2002 compared to 9.2% for the six months ending June 30, 2001.
This decrease in yield was partially offset by the growth in balances, which
minimized the decrease in interest revenue from loans to $2.6 million for the
first six months of 2002.

The investment portfolio is the other main component of the Company's earning
assets. The Company's investment policy is conservative. The Company primarily
invests in mortgage-backed securities, U.S. Treasuries, U.S. Government
Agencies, and high-grade municipals. Since the risk factor for these types of
investments is significantly lower than that of loans, the yield earned on
investments is less than that of loans.

Average investment securities decreased $71.9 million compared to the average
balance at June 30, 2001. The decrease in the average balance of investment


                                       11


securities was followed with a corresponding decrease in interest income of $2.5
million for the six months ending June 30, 2002. The average yield, on a taxable
equivalent basis, in the investment portfolio was 6.4% in 2002 compared to 6.5%
in 2001. Net interest income on the Average Balance Sheet is shown on a taxable
equivalent basis, which is higher than net interest income on the Consolidated
Statements of Income because of adjustments that relate to income on certain
securities that are exempt from federal income taxes.

Average interest-bearing sources of funds increased $26.6 million or 4.2%. As a
result of the decline in interest rates, interest expense decreased 41.1%.
Overall, the average interest cost on interest bearing liabilities was 2.3% for
the period ended June 30, 2002 and 4.0% at June 30, 2001.

The Company's earning assets and rate sensitive liabilities are subject to
repricing at different times, which exposes the Company to income fluctuations
when interest rates change. In order to minimize income fluctuations, the
Company attempts to match asset and liability maturities. However, some maturity
mismatch is inherent in the asset and liability mix.

Allowance for Loan Losses
As a financial institution that assumes lending and credit risks as a principal
element of its business, the Company anticipates that credit losses will be
experienced in the normal course of business. The allowance for loan losses is
established to absorb losses inherent in the portfolio. The allowance for loan
losses is maintained at a level considered by management to be adequate to
provide for risks inherent in the loan portfolio. In determining the adequacy of
the allowance for loan losses, management takes into consideration examinations
by the Company's supervisory authorities, results of internal credit reviews,
financial condition of borrowers, loan concentrations, prior loan loss
experience, and general economic conditions. The allowance is based on estimates
and ultimate losses may vary from the current estimates. Management reviews
these estimates periodically and, when adjustments are necessary, they are
reported in the period in which they become known.

The Company's written lending policies, along with applicable laws and
regulations governing the extension of credit, require risk analysis as well as
ongoing portfolio and credit management through loan product diversification,
lending limits, ongoing credit reviews and approval policies prior to funding of
any loan. The Company manages and controls credit risk through diversification,
dollar limits on loans to one borrower and by primarily restricting loans made
to its principal market area. Loans that are performing but have shown some
signs of weakness are subjected to more stringent reporting. Fixed-rate real
estate loans are comprised primarily of loans with maturities of less than five
years. Generally, long-term residential loans are originated by the Company and
sold on the secondary market.

The appropriate allowance amount is based upon growth in the loan portfolio,
management's evaluation of the credit quality of the loan portfolio, the
prevailing economic climate, and its effect on borrowers' ability to repay loans
in accordance with the terms of the notes and current loan losses. After
reviewing all factors, management concluded that the current amount in the
allowance for loan losses was adequate.

As of June 30, 2002, the allowance for loan losses was $13.1 million, which
represents 2.0% of the total loan balances. For the period ended June 30, 2001,
the allowance was $12.6 million and 2.4% of total loans. The table below
illustrates the change in the allowance for the first six months of 2002 and
2001.

                                       12





Allowance for Loan Losses (in thousands)
- --------------------------
                                                               
Balance, December 31, 2001                                   $ 12,709
Provision Charged to Expense                                      500
Recoveries of Loans Previously Charged Off                        154
Loans Charged Off                                               (270)
                                                                    )
======================================================================
Balance, June 30, 2002                                       $ 13,093
======================================================================

Balance, December 31, 2000                                   $ 11,876
Provision Charged to Expense                                      600
Recoveries of Loans Previously Charged Off                        369
Loans Charged Off                                               (190)
                                                                    )
======================================================================
Balance, June 30, 2001                                       $ 12,655
======================================================================


Non-Interest Income
Overall, non-interest income increased $1.3 million for the six months ending
June 30, 2002 compared to the same period of 2001. Service charges on deposits
increased $288 thousand due to additional services offered and pricing
considerations. $16.7 million in investment securities, which were close to
their maturity date, were sold to aid in funding loan growth. This sale resulted
in a gain of $263 thousand. Other non-interest income grew $851 thousand. The
increase was the result of the increase in the cash surrender value of life
insurance contracts, which is recognized as other non-interest income.

Non-Interest Expense
Salaries and Employee Benefits remained unchanged from the prior year due to
efficiencies achieved through cost containment. Occupancy expense increased $22
thousand or 2.7%. Equipment expense increased $229 thousand or 23.8%. This
increase was due to the purchase and installation of a new voice and data system
during first quarter of 2002. Also, software and hardware maintenance increased
in 2002 compared to 2001 due to the conversion to a new core operating system
during second quarter of 2001. Other operating expense increased $454 thousand
or 13.9% due to an increase in outside professional fees and an increase in
marketing expenditures promoting various loan products.

Overall, non-interest expense increased $711 thousand or 5.2% over the second
quarter of 2001. It is anticipated that the future growth rate in other
operating expense will remain modest and comparable to the growth in assets.

Income Taxes
The provision for income taxes decreased 6.1% to $3.7 million for the first six
months of 2002. This was due to the purchase of insurance contracts in which the
increase in the cash surrender value, which is recorded in non-interest income,
is exempt from federal and state income taxes. For the six months ended June 30,
2001, the provision totaled $3.9 million. Additionally, the Company's effective
tax rate decreased for the first six months of 2002 and was 36.7% compared to
38.8% for the same period in 2001.

Balance Sheet Analysis

Investment Securities
The Financial Accounting Standards Board statement, Accounting for Certain
Investments in Debt and Equity Securities, requires the Company to classify its


                                       13


investments as held-to-maturity, trading or available-for-sale. Securities are
classified as held-to-maturity and accounted for at amortized cost when the
Company has the positive intent and ability to hold the securities to maturity.
Trading securities are securities acquired for short-term appreciation and are
carried at fair value, with unrealized gains and losses recorded in non-interest
income. Securities classified as available-for-sale include securities, which
may be sold to effectively manage interest rate risk exposure, prepayment risk,
satisfy liquidity demand and other factors. These securities are reported at
fair value with aggregate, unrealized gains or losses excluded from income and
included as a separate component of shareholders' equity, net of related income
taxes.

The investment portfolio provides the Company with an income alternative to
loans. As of June 30, 2002 the investment portfolio represented 21.1% of the
Company's total assets. Total investment securities decreased $101.2 million
from a year ago and now total $195.9 million. Not included in the investment
portfolio are overnight investments in Federal Funds Sold. For the six months
ended June 30, 2002, average Federal Funds Sold was $32.9 million compared to
$43.3 in 2001.

Loans
The Company's loan portfolio at June 30, 2002 increased $130.6 million from June
30, 2001. The increase is the result of an aggressive calling program on high
quality prospects and a favorable economic climate in the Company's market area.
Additionally, on an average balance basis loans have increased $103.4 million or
20.8%. Management believes that the growth rate in loans will continue at a
modest rate through third quarter, 2002. The table following sets forth the
distribution of the loan portfolio by type as of the dates indicated.



Loan Portfolio As Of:
(in thousands)                         June 30, 2002           Dec. 31, 2001            June 30, 2001
- ----------------------------------------------------- ----------------------- ------------------------
                                                                                    
Real Estate Construction                    $ 51,963                $ 49,692                 $ 36,850
Real Estate - Other                          341,440                 304,451                  269,709
Commercial                                   246,385                 227,909                  199,484
Consumer                                      20,135                  21,133                   23,291
- ----------------------------------------------------- ----------------------- ------------------------
  Gross Loans                                659,923                 603,185                  529,334
Less:


  Unearned Income                              1,546                   1,016                      500
  Allowance for Loan Losses                   13,093                  12,709                   12,655
- ----------------------------------------------------- ----------------------- ------------------------
  Net Loans                                $ 645,284               $ 589,460                $ 516,179
===================================================== ======================= ========================



Non-Performing Assets
The Company's policy is to place loans on non-accrual status when, for any
reason, 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.

As a result of events beyond the Company's control, problem loans can and do
occur. As of June 30, 2002, non-performing loans were $10.3 million compared to
$903 thousand at June 30, 2001. The increase in non-performing loans is
primarily made up of loans to one borrower. These loans are adequately
collateralized with real estate, accounts receivable and inventory and have been
accounted for in our allowance for loan losses. These loans are not considered
to be impaired because of their collateral position.  The Company reported no


                                       14


other real estate owned for both June 30, 2002 and June 30, 2001. Accrued
interest reversed from income on loans placed on a non-accrual status totaled
$264 thousand at June 30, 2002 compared to $77 thousand at June 30, 2001.




Non-Performing Assets
(dollar amounts in thousands)             June 30, 2002            Dec. 31, 2001           June 30, 2001
- -------------------------------------------------------------------------------- -----------------------
                                                                                           
Nonperforming Loans                             $10,330                   $2,409                    $903
Other Real Estate Owned                               0                        0                       0
================================================================================ =======================
Total                                           $10,330                   $2,409                    $903
================================================================================ =======================

Non-Performing Assets
as a % of Total Loans                             1.57%                     0.4%                    0.2%

Allowance for Loan Losses as a % of
Non-Performing Loans                             126.7%                   527.6%                 1401.4%



Deposits
At June 30, 2002, deposits totaled $780.1 million. This represents an increase
of 1.5% or $11.3 million from June 30, 2001. The increase was focused in demand,
interest bearing transaction (IBT) and savings accounts, which increased $11.4
million, $7.5 million and $34.5 million, respectively. When acquiring loan
customers, the Bank is focusing on developing a full relationship which means
bringing in demand, IBT and savings accounts, also. While demand, IBT and
savings accounts have increased; time deposit balances have decreased $42.1
million or 12.2%. Rates are low and as existing customers' CD's mature those
customers are opting to instead invest in short-term deposits. It is expected
that this trend will continue through third quarter of 2002.

Capital
Much attention has been directed at the capital adequacy of the financial
institution industry. The Company relies on capital generated through the
retention of earnings to satisfy its capital requirements. The Company engages
in an ongoing assessment of its capital needs in order to support business
growth and to insure depositor protection. Shareholders' Equity totaled $101.2
million at June 30, 2002 and $97.1 million at June 30, 2001, which represents an
increase of $4.0 million or 4.2%.

The Board of Governors of the Federal Reserve System, and the Federal Deposit
Insurance Corporation have adopted risk-based capital guidelines. The guidelines
are designed to make capital requirements more sensitive to differences in risk
related assets among Banking organizations, to take into account off-balance
sheet exposures and to aid in making the definition of Bank capital uniform.
Company assets and off-balance sheet items are categorized by risk. The results
of these regulations are that assets with a higher degree of risk require a
larger amount of capital; assets, such as cash, with a low degree of risk have
little or no capital requirements. Under the guidelines the Company is currently
required to maintain regulatory risk based capital equal to at least 8.0%. As of
June 30, 2002 the Company meets all capital adequacy requirements to which it is
subject. The following table illustrates the relationship between regulatory
capital requirements and the Company and Bank's capital position.


                                       15





                                                                                                  To Be Well
                                                                                               Capitalized Under
                                                                         Regulatory Capital    Prompt Corrective
(in thousands)                                        Actual                Requirements       Action Provisions
- ------------------------------------------------------------------------------------------------------------------
The Company:                                    Amount       Ratio       Amount      Ratio      Amount      Ratio
- ------------------------------------------------------------------------------------------------------------------
                                                                                          
As of June 30, 2002
Total Capital to Risk Weighted Assets         $109,013       12.8%      $68,292       8.0%     N/A        N/A
Tier I Capital to Risk Weighted Assets         $98,312       11.5%      $34,146       4.0%     N/A        N/A
Tier I Capital to Average Assets               $98,312       10.6%      $37,228       4.0%     N/A        N/A




                                                                                                  To Be Well
                                                                                               Capitalized Under
                                                                         Regulatory Capital    Prompt Corrective
(in thousands)                                        Actual                Requirements       Action Provisions
- ------------------------------------------------------------------------------------------------------------------
The Bank:                                       Amount       Ratio       Amount      Ratio      Amount      Ratio
- ------------------------------------------------------------------------------------------------------------------
                                                                                          
As of June 30, 2002
Total Capital to Risk Weighted Assets         $104,400       12.3%      $68,100       8.0%     $85,125      10.0%
Tier I Capital to Risk Weighted Assets         $93,730       11.0%      $34,050       4.0%     $51,075       6.0%
Tier I Capital to Average Assets               $93,730       10.1%      $37,056       4.0%     $46,321       5.0%


Risk Management
The Company has adopted a Risk Management Plan to ensure the proper control and
management of all risk factors inherent in the operation of the Company and the
Bank. Specifically, credit risk, interest rate risk, liquidity risk, compliance
risk, strategic risk, reputation risk and price risk can all affect the market
risk of the Company. These specific risk factors are not mutually exclusive. It
is recognized that any product or service offered by the Company may expose the
Company and Bank to one or more of these risk factors.

Credit Risk
Credit risk is the risk to earnings or capital arising from an obligor's failure
to meet the terms of any contract or otherwise fail to perform as agreed. Credit
risk is found in all activities where success depends on counterparty, issuer,
or borrower performance.

Central to the Company's credit risk management is a proven loan risk rating
system. Limitations on industry concentration, aggregate customer borrowings and
geographic boundaries also reduce loan credit risk. Credit risk in the
investment portfolio is minimized through clearly defined limits in the Bank's
policy statements. Senior Management, Directors Committees, and the Board of
Directors are provided with timely and accurate information to appropriately
identify, measure, control and monitor the credit risk of the Company and the
Bank.

The allowance for loan losses is based on estimates of probable losses inherent
in the loan portfolio. The amount actually incurred with respect to these losses
can vary significantly from the estimated amounts. The Company's methodology
includes several features which are intended to reduce the difference between
estimated and actual losses.

Implicit in lending activities is the risk that losses will and do occur and
that the amount of such losses will vary over time. Consequently, the Company
maintains an allowance for loan losses by charging a provision for loan losses
to earnings. Loans determined to be losses are charged against the allowance for
loan losses. The Company's allowance for loan losses is maintained at a level
considered by management to be adequate to provide for estimated credit losses
inherent in the portfolio.

                                       16


The Company's methodology for assessing the appropriateness of the allowance
consists of several key elements, which include the formula allowance and
specific allowances for identified problem loans and portfolio segments.
Specific allowances are established in cases where management has identified
conditions or circumstances related to credit that management believes indicate
the possibility that a loss may be incurred in excess of the amount determined
by the application of the formula reserve. Management performs a detailed
analysis of these loans, including, but not limited to appraisals of the
collateral, conditions of the marketplace for liquidating the collateral and
assessment of the guarantors. Management then determines the loss potential and
allocates a portion of the allowance for losses for each of these credits.

Management believes that the allowance for loan losses at June 30, 2002 was
adequate to provide for recognized, unidentified and estimated inherent losses
in the portfolio. No assurances can be given that future events may not result
in increases in delinquencies, non-performing loans or net loan chargeoffs that
would increase the provision for loan losses and thereby adversely affect the
results of operations.

Asset / Liability Management - Interest Rate Risk
The mismatch between maturities of interest sensitive assets and liabilities
results in uncertainty in the Company's earnings and economic value and is
referred to as interest rate risk. Farmers & Merchants Bancorp's primary
objective in managing interest rate risk is to minimize the potential for
significant loss as a result of changes in interest rates.

The Company measures interest rate risk in terms of potential impact on both its
economic value and earnings. The methods for governing the amount of interest
rate risk include: analysis of asset and liability mismatches (GAP analysis),
the utilization of a simulation model and limits on maturities of investment,
loan and deposit products to relatively short periods which reduces the market
volatility of those instruments.

The gap analysis measures, at specific time intervals, the divergence between
earning assets and interest bearing liabilities for which repricing
opportunities will occur. A positive difference, or gap, indicates that earning
assets will reprice faster than interest-bearing liabilities. This will
generally produce a greater net interest margin during periods of rising
interest rates and a lower net interest margin during periods of declining
interest rates. Conversely, a negative gap will generally produce a lower net
interest margin during periods of rising interest rates and a greater net
interest margin during periods of decreasing interest rates.

The interest rates paid on deposit accounts do not always move in unison with
the rates charged on loans. In addition, the magnitude of changes in the rates
charged on loans is not always proportionate to the magnitude of changes in the
rate paid for deposits. Consequently, changes in interest rates do not
necessarily result in an increase or decrease in the net interest margin solely
as a result of the differences between repricing opportunities of earning assets
or interest bearing liabilities.

The Company also utilizes the results of a dynamic simulation model to
quantify the estimated exposure of net interest income to sustained interest
rate changes. The sensitivity of the Company's net interest income is measured
over a rolling one-year horizon. The simulation model estimates the impact of
changing interest rates on interest income from all interest earning assets and
the interest expense paid on all interest bearing liabilities reflected on the
Company's balance sheet. This sensitivity analysis is compared to policy limits,
which specify a maximum tolerance level for net interest income exposure over a
one-year horizon assuming no balance sheet growth, given both a 200 basis point
upward and downward shift in interest rates. A parallel and pro rata shift in
rates over a 12-month period is assumed. Results that exceed policy limits, if
any, are analyzed for risk tolerance and reported to the Board with appropriate
recommendations. The results for June 30, 2002 were not available but management
does not believe that the results for June 30th would be materially different
from those calculated at March 31, 2002, which follow. At March 31, 2002, the
Company's estimated net interest income sensitivity to changes in interest
rates, as a percent of net interest income was an increase in net interest
income of 15.32% if rates increase by 200 basis points and a decrease in net
interest income of 15.89% if rates decline by 200 basis points.

                                       17


The estimated sensitivity does not necessarily represent a Company forecast and
the results may not be indicative of actual changes to the Company's net
interest income. These estimates are based upon a number of assumptions
including: the nature and timing of interest rate levels including yield curve
shape, prepayments on loans and securities, pricing strategies on loans and
deposits, replacement of asset and liability cashflows, and other assumptions.
While the assumptions used are based on current economic and local market
conditions, there is no assurance as to the predictive nature of these
conditions including how customer preferences or competitor influences might
change.

Liquidity
Liquidity risk is the risk to earnings or capital resulting from the Bank's
inability to meet its obligations when they come due without incurring
unacceptable losses. It includes the ability to manage unplanned decreases or
changes in funding sources and to recognize or address changes in market
conditions that affect the Bank's ability to liquidate assets or acquire funds
quickly and with minimum loss of value. The Company endeavors to maintain a cash
flow adequate to fund operations, handle fluctuations in deposit levels, respond
to the credit needs of borrowers and to take advantage of investment
opportunities as they arise. The principal sources of liquidity include interest
and principal payments on loans and investments, proceeds from the maturity or
sale of investments, and growth in deposits.

In general, liquidity risk is managed daily by controlling the level of Fed
Funds and the use of funds provided by the cash flow from the investment
portfolio. The Company maintains overnight investments in Fed Funds as a reserve
for temporary liquidity needs. During the first half of 2002, Federal Funds
averaged $32.9 million. In addition, the Company maintains Federal Fund credit
lines of $136 million with major correspondent banks subject to the customary
terms and conditions for such arrangements.

At June 30, 2002, the Company had available liquid assets, which included cash
and unpledged investment securities of approximately $88.8 million, which
represents 9.5% of total assets.


Average Balance Sheets

The tables on the following pages reflect the Company's average balance sheets
and volume and rate analysis for the three-month and six-month periods ending
June 30, 2002 and 2001.

The average yields on earning assets and average rates paid on interest-bearing
liabilities have been computed on an annualized basis for purposes of
comparability with full year data. Average balance amounts for assets and
liabilities are the computed average of daily balances.

The volume and rate analysis of net interest revenue summarizes the changes in
average asset and liability balances and interest earned and paid resulting from
changes in average asset and liability balances (volume) and changes in average
interest rates and the total net change in interest income and expenses. The
changes in interest due to both rate and volume have been allocated to volume
and rate changes in proportion to the relationship of the absolute dollar amount
of the change in each.

                                       18


Farmers & Merchants Bancorp
Quarterly Average Balances and Interest Rates
(Interest and Rates on a Taxable Equivalent Basis)
(in thousands)


                                                             Three Months Ended June 30,          Three Months Ended June 30,
                                                                       2002                                    2001
Assets                                                     Balance     Interest      Rate      Balance      Interest      Rate
- --------------------------------------------------------------------------------------------------------------------------------
                                                                                                        
Federal Funds Sold                                        $ 27,586      $ 187        2.72%     $ 36,400      $ 500        5.51%
Investment Securities Available-for-Sale
  U.S. Treasuries                                                0          0        0.00%            0          0        0.00%
  U.S. Agencies                                              4,314         56        5.26%        5,087         73        5.82%
  Municipals - Taxable                                       1,597         23        5.84%        1,986         29        5.92%
  Municipals - Non-Taxable                                  21,908        367        6.79%       21,902        358        6.63%
  Mortgage Backed Securities                               155,312      2,311        6.03%      224,459      3,621        6.54%
  Other                                                      9,462        152        6.51%        5,442        133        9.91%
- --------------------------------------------------------------------------------------------------------------------------------
    Total Investment Securities Available-for-Sale         192,593      2,909        6.13%      258,876      4,214        6.60%
- --------------------------------------------------------------------------------------------------------------------------------

Investment Securities Held-to-Maturity
  U.S. Treasuries                                                0          0        0.00%            0          0        0.00%
  U.S. Agencies                                                  0          0        0.00%            0          0        0.00%
  Municipals - Taxable                                           0          0        0.00%        2,938         48        6.63%
  Municipals - Non-Taxable                                  29,436        537        7.40%       33,149        635        7.77%
  Mortgage Backed Securities                                     0          0        0.00%            0          0        0.00%
  Other                                                        540          7        5.26%          646         16       10.04%
- --------------------------------------------------------------------------------------------------------------------------------
    Total Investment Securities Held-to-Maturity            29,976        544        7.36%       36,733        699        7.72%
- --------------------------------------------------------------------------------------------------------------------------------

Loans
  Real Estate                                              371,241      6,654        7.19%      299,323      7,045        9.44%
  Commercial                                               223,362      3,116        5.60%      193,226      3,818        7.93%
  Installment                                               15,862        361        9.13%       19,660        500       10.20%
  Credit Card                                                3,268         74        9.08%        3,322         82        9.90%
  Municipal                                                    968         21        8.70%          617         18       11.70%
- --------------------------------------------------------------------------------------------------------------------------------
    Total Loans                                            614,701     10,226        6.67%      516,148     11,463        8.91%
- --------------------------------------------------------------------------------------------------------------------------------
    Total Earning Assets                                   864,856    $13,866        6.43%      848,157    $16,876        7.98%
                                                                   ========================             ========================

Unrealized Gain/(Loss) on Securities Available-for-Sale      4,898                                2,982
Allowance for Loan Losses                                  (13,106)                             (12,526)
Cash and Due From Banks                                     28,656                               33,860
All Other Assets                                            49,136                               24,306
- -------------------------------------------------------------------                        -------------
    Total Assets                                          $934,440                             $896,779
===================================================================                        =============

Liabilities & Shareholders' Equity
Interest Bearing Deposits
  Interest Bearing DDA                                     $87,554       $ 75        0.34%      $70,518      $ 166        0.94%
  Savings                                                  214,843        527        0.98%      179,961        927        2.07%
  Time Deposits                                            308,999      2,266        2.94%      339,410      4,356        5.15%
- --------------------------------------------------------------------------------------------------------------------------------
    Total Interest Bearing Deposits                        611,396      2,868        1.88%      589,889      5,449        3.71%
Other Borrowed Funds                                        40,990        556        5.44%       41,020        557        5.45%
- --------------------------------------------------------------------------------------------------------------------------------
    Total Interest Bearing Liabilities                     652,386     $3,424        2.11%      630,909     $6,006        3.82%
                                                                   ========================             ========================

Demand Deposits                                            173,225                              161,692
All Other Liabilities                                        8,499                                9,302
- -------------------------------------------------------------------                        -------------
    Total Liabilities                                      834,110                              801,903

Shareholders' Equity                                       100,330                               94,876
- -------------------------------------------------------------------                        -------------
    Total Liabilities & Shareholders' Equity              $934,440                             $896,779
===================================================================                        =============

Net Interest Margin                                                                  4.79%                                5.08%
================================================================================================================================

Notes:  Yields on  municipal  securities  have been  calculated  on a fully
taxable equivalent basis using the applicable Federal and State income tax rates
for the period.  Loan Fees are included in interest  income for loans.  Unearned
discount is included for rate calculation  purposes.  Nonaccrual loans and lease
financing  receivables  have been  included in the average  balances.  Yields on
securities available-for-sale are based on historical cost.
                                       19


Farmers & Merchants Bancorp
Year-to-Date Average Balances and Interest Rates
(Interest and Rates on a Taxable Equivalent Basis)
(in thousands)


                                                               Six Months Ended June 30,         Six Months Ended June 30,
                                                                         2002                             2001
Assets                                                     Balance     Interest    Rate       Balance   Interest      Rate
- ----------------------------------------------------------------------------------------------------------------------------
                                                                                                    
Federal Funds Sold                                        $ 32,948      $ 330      2.02%     $ 43,355    $ 1,102      5.13%
Investment Securities Available-for-Sale
  U.S. Treasuries                                                0          0      0.00%        2,059         55      5.39%
  U.S. Agencies                                              5,072        133      5.32%        5,948        172      5.83%
  Municipals - Taxable                                       1,618         51      6.39%        1,990         62      6.28%
  Municipals - Non-Taxable                                  21,853        729      6.76%       21,771        709      6.57%
  Mortgage Backed Securities                               165,141      5,080      6.24%      230,128      7,368      6.46%
  Other                                                      9,404        310      6.68%        5,111        186      7.34%
- ----------------------------------------------------------------------------------------------------------------------------
    Total Investment Securities Available-for-Sale         203,088      6,303      6.29%      267,007      8,552      6.46%
- ----------------------------------------------------------------------------------------------------------------------------

Investment Securities Held-to-Maturity
  U.S. Treasuries                                                0          0      0.00%            0          0      0.00%
  U.S. Agencies                                                  0          0      0.00%          740         22      6.00%
  Municipals - Taxable                                           0          0      0.00%        2,936         98      6.73%
  Municipals - Non-Taxable                                  29,632      1,089      7.45%       33,822      1,264      7.54%
  Mortgage Backed Securities                                     0          0      0.00%            0          0      0.00%
  Other                                                        542         17      6.36%          659         34     10.40%
- ----------------------------------------------------------------------------------------------------------------------------
    Total Investment Securities Held-to-Maturity            30,174      1,106      7.43%       38,157      1,418      7.50%
- ----------------------------------------------------------------------------------------------------------------------------

Loans
  Real Estate                                              364,553     12,974      7.18%      294,322     13,730      9.41%
  Commercial                                               216,759      6,249      5.81%      178,941      7,753      8.74%
  Consumer                                                  15,923        714      9.04%       20,383      1,026     10.15%
  Credit Card                                                3,303        158      9.65%        3,463        185     10.77%
  Municipal                                                    876         33      7.60%          898         27      6.06%
- ----------------------------------------------------------------------------------------------------------------------------
    Total Loans                                            601,414     20,128      6.75%      498,007     22,721      9.20%
- ----------------------------------------------------------------------------------------------------------------------------
    Total Earning Assets                                   867,624    $27,867      6.48%      846,526    $33,794      8.05%
                                                                   ======================             ======================

Unrealized Gain/(Loss) on Securities Available-for-Sale      5,002                              2,296
Allowance for Loan Losses                                  (13,041)                           (12,207)
Cash and Due From Banks                                     28,471                             27,216
All Other Assets                                            46,718                             26,284
- -------------------------------------------------------------------                      -------------
    Total Assets                                          $934,774                           $890,115
===================================================================                      =============

Liabilities & Shareholders' Equity
Interest Bearing Deposits
  Interest Bearing DDA                                     $88,359      $ 164      0.37%      $74,242      $ 348      0.95%
  Savings                                                  212,769      1,140      1.08%      178,681      1,870      2.11%
  Time Deposits                                            312,026      4,897      3.16%      333,646      9,072      5.48%
- ----------------------------------------------------------------------------------------------------------------------------
    Total Interest Bearing Deposits                        613,154      6,201      2.04%      586,569     11,290      3.88%
Other Borrowed Funds                                        40,993      1,106      5.44%       41,026      1,110      5.46%
- ----------------------------------------------------------------------------------------------------------------------------
    Total Interest Bearing Liabilities                     654,147     $7,307      2.25%      627,595    $12,400      3.98%
                                                                   ======================             ======================

Non Interest Bearing DDA                                   171,769                            159,701
All Other Liabilities                                        8,360                              9,134
- -------------------------------------------------------------------                      -------------
    Total Liabilities                                      834,276                            796,430

Shareholders' Equity                                       100,498                             93,685
- -------------------------------------------------------------------                      -------------
    Total Liabilities & Shareholders' Equity              $934,774                           $890,115
===================================================================                      =============

Net Interest Margin                                                                4.78%                              5.10%
============================================================================================================================

Notes:  Yields on  municipal  securities  have been  calculated  on a fully
taxable equivalent basis using the applicable Federal and State income tax rates
for the period.  Loan Fees are included in interest  income for loans.  Unearned
discount is included for rate calculation  purposes.  Nonaccrual loans and lease
financing  receivables  have been  included in the average  balances.  Yields on
securities available-for-sale are based on historical cost.

                                       20



Farmers & Merchants Bancorp
Volume and Rate Analysis of Net Interest Revenue
(Rates on a Taxable Equivalent Basis)


(in thousands)                                                 Three Months Ended                         Six Months Ended
                                                        Jun. 30, 2002 vs. Jun. 30, 2001            Jun. 30, 2002 vs. Jun. 30, 2001
Interest Earning Assets                                 Volume        Rate      Net Chg.          Volume         Rate      Net Chg.
- ----------------------------------------------------------------------------------------------------------------------------------
                                                                                                         
Federal Funds Sold                                     $ (378)       $ 64       $ (314)           $ (257)      $ (515)     $ (772)
Investment Securities Available for Sale
  U.S. Treasuries                                           0           0            0               (28)         (28)        (56)
  U.S. Agencies                                           (10)         (7)         (17)              (24)         (15)        (39)
  Municipals - Taxable                                     (5)         (1)          (6)              (14)           3         (11)
  Municipals - Non-Taxable                                  0           9            9                 1           18          19
  Mortgage Backed Securities                           (1,046)       (264)      (1,310)           (2,043)        (244)     (2,287)
  Other                                                   235        (216)          19               173          (48)        125
- ----------------------------------------------------------------------------------------------------------------------------------
    Total Investment Securities Available for Sale       (826)       (479)      (1,305)           (1,935)        (314)     (2,249)
- ----------------------------------------------------------------------------------------------------------------------------------

Investment Securities Held to Maturity
  U.S. Treasuries                                           0           0            0                 0            0           0
  U.S. Agencies                                             0           0            0               (11)         (11)        (22)
  Municipals - Taxable                                    (25)        (23)         (48)              (49)         (49)        (98)
  Municipals - Non-Taxable                                (68)        (30)         (98)             (161)         (14)       (175)
  Mortgage Backed Securities                                0           0            0                 0            0           0
  Other                                                    (2)         (7)          (9)               (5)         (12)        (17)
- ----------------------------------------------------------------------------------------------------------------------------------
    Total Investment Securities Held to Maturity          (95)        (60)        (155)             (226)         (86)       (312)
- ----------------------------------------------------------------------------------------------------------------------------------

Loans:
  Real Estate                                           6,567      (6,958)        (391)            6,207       (6,963)       (756)
  Commercial                                            2,877      (3,579)        (702)            3,468       (4,973)     (1,505)
  Installment                                             (90)        (49)        (139)             (208)        (104)       (312)
  Credit Card                                               0          (7)          (7)               (8)         (19)        (27)
  Other                                                    28         (25)           3                 0            6           6
- ----------------------------------------------------------------------------------------------------------------------------------
    Total Loans                                         9,382     (10,618)      (1,236)            9,459      (12,053)     (2,594)
- ----------------------------------------------------------------------------------------------------------------------------------
    Total Earning Assets                                8,083     (11,093)      (3,010)            7,041      (12,968)     (5,927)
- ----------------------------------------------------------------------------------------------------------------------------------

Interest Bearing Liabilities
Interest Bearing Deposits:
  Transaction                                             208        (299)         (91)              158         (343)       (185)
  Savings                                                 944      (1,344)        (400)              829       (1,559)       (730)
  Time Deposits                                          (362)     (1,728)      (2,090)             (554)      (3,620)     (4,174)
- ----------------------------------------------------------------------------------------------------------------------------------
    Total Interest Bearing Deposits                       790      (3,371)      (2,581)              433       (5,522)     (5,089)
Other Borrowed Funds                                       (1)          0           (1)               (1)          (3)         (4)
- ----------------------------------------------------------------------------------------------------------------------------------
    Total Interest Bearing Liabilities                    789      (3,371)      (2,582)              432       (5,525)     (5,093)
- ----------------------------------------------------------------------------------------------------------------------------------
Total Change                                          $ 7,294    $ (7,722)      $ (428)          $ 6,609     $ (7,443)     $ (834)
==================================================================================================================================

Notes: Rate/volume variance is allocated based on the percentage relationship of
changes in volume and changes in rate to the total "net change." The above
figures have been rounded to the nearest whole number.

                                       21



PART II.  OTHER INFORMATION


ITEM 1. Legal Proceedings

         None

ITEM 2. Changes in Securities

         None

ITEM 3. Defaults Upon Senior Securities

         Not applicable

ITEM 4. Submission of Matters to a Vote of Security Holders

Annual Meeting of Shareholders of Farmers & Merchants Bancorp held on April 15,
2002. The business conducted at the meeting included election of directors and
ratification of PricewaterhouseCoopers LLP as the Company's independent
auditors. Following is the voting results from the 2002 annual meeting of
shareholders. As of April 15, 2002, 488,224 shares represented in person and by
proxy participated in this election and shares were voted on the two measures
before the shareholders as follows:

1.  ELECTION OF DIRECTORS



            Directors                   %                  For                   %                Withheld
            ---------                   -                  ---                   -                --------

                                                                                        
  Stewart C. Adams, Jr.               98.14              479,140               1.43                 6,967
                                  --------------     -----------------     --------------      ----------------

  Ralph Burlington                    98.78              482,263               1.32                 6,431
                                  --------------     -----------------     --------------      ----------------

  Robert F. Hunnell                   98.25              479,676               1.32                 6,431
                                  --------------     -----------------     --------------      ----------------

  Ole R. Mettler                      98.77              482,235               1.32                 6,459
                                  --------------     -----------------     --------------      ----------------

  James E. Podesta                    98.78              482,263               1.32                 6,431
                                  --------------     -----------------     --------------      ----------------

  Kevin Sanguinetti                   98.78              482,263               1.32                 6,431
                                  --------------     -----------------     --------------      ----------------

  George Scheideman                   98.75              482,128               1.34                 6,566
                                  --------------     -----------------     --------------      ----------------

  H.C. Schumacher                     98.77              482,213               1.33                 6,481
                                  --------------     -----------------     --------------      ----------------

  Kent A. Steinwert                   98.64              481,576               1.46                 7,118
                                  --------------     -----------------     --------------      ----------------

  Calvin (Kelly) Suess                98.78              482,263               1.32                 6,431
                                  --------------     -----------------     --------------      ----------------

  Carl A. Wishek, Jr.                 98.51              480,972               1.58                 7,722
                                  --------------     -----------------     --------------      ----------------


                                       22



2.  PROPOSAL TO RATIFY THE APPOINTMENT OF PRICEWATERHOUSECOOPERS, LLP




                               No. of Shares                      %

                                                           
         For:                    466,253                         66.49
                          ----------------------         ----------------------

         Against:                   0                            0.00
                          ----------------------         ----------------------

         Abstain                 21,971                          3.13
                          ----------------------         ----------------------




ITEM 5. Other Information

         None

ITEM 6(a). Exhibits

         See Exhibit Index on Page 25


ITEM 6(b). Reports on Form 8-K

         None



                                       23




                                   SIGNATURES

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


                                            FARMERS & MERCHANTS BANCORP


Date:  August 8, 2002                       /s/Kent A. Steinwert
                                            -----------------------------
                                            Kent A. Steinwert
                                            President and
                                            Chief Executive Officer
                                            (Principal Executive Officer)



Date: August 8, 2002                        /s/John R. Olson
                                            -----------------------------
                                            John R. Olson
                                            Executive Vice President and
                                            Chief Financial Officer
                                            (Principal Accounting Officer)





                                       24




     Index to Exhibits

     Exhibit No.                            Description

2    Plan of Reorganization as filed on Form 8-K dated April 30, 1999, are
     incorporated herein by reference.

3(i) Amended and Restated Certificate of Incorporation of Farmers & Merchants
     Bancorp, filed as Exhibit 3(i) to Registrant's 8-K dated April 30, 1999, is
     incorporated herein by reference.

3(ii)By-Laws of Farmers & Merchants Bancorp, filed as Exhibit 3(i) to
     Registrant's 8-K dated April 30, 1999, is incorporated herein by reference.

10.1 Employment Agreement dated July 8, 1997, between Farmers & Merchants Bank
     of Central California and Kent A. Steinwert, filed as Exhibit 10.1 to
     Registrant's 8-K dated April 30, 1999, is incorporated herein by reference.

10.2 Employment Agreement dated July 8, 1997, between Farmers & Merchants Bank
     of Central California and Richard S. Erichson, filed as Exhibit 10.2 to
     Registrant's 8-K dated April 30, 1999, is incorporated herein by reference.

10.3 Deferred Bonus Plan of Farmers & Merchants Bank of Central California
     adopted as of March 2, 1999, filed as Exhibit 10.3 to Registrant's 8-K
     dated April 30, 1999, is incorporated herein by reference.

10.4 Amended and Restated Deferred Bonus Plan of Farmers & Merchants Bank of
     Central California, executed May 11, 1999, filed as Exhibit 10.4 to
     Registrant's 8-K dated April 30, 1999, is incorporated herein by reference.

99.1 Statement of Chief Executive Officer under 18 U.S.C. Section 1350

99.2 Statement of Chief Financial Officer under 18 U.S.C. Section 1350


                                       25