What Farmers & Merchants Bancorp told the SEC could break it.

Farmers & Merchants Bancorp's banking offices, customers and agricultural lending are concentrated in the mid Central Valley of California, where it has operated throughout its history; this single-region concentration means a downturn in the Central Valley economy, agricultural sector, real-estate market or water supply — or region-specific natural disasters such as drought and wildfire — would disproportionately affect its loan quality, deposits and earnings.

“The Company has provided financing to agricultural customers in the mid Central Valley of California throughout its history.”

Farmers & Merchants Bancorp has provided agricultural credit throughout its history and states it will always have material exposure to the agriculture industry; agriculture is cyclical — affected by fluctuating commodity prices, changing climatic conditions and the availability of seasonal labor — so downturns in farm incomes, crop prices or labor availability would elevate credit losses in its concentrated ag-loan book and pressure its results.

“The Company remains committed to providing credit to agricultural customers and will always have a material exposure to this industry.”

Farmers & Merchants Bancorp is exposed to trade-policy volatility that affects its borrowers: after the U.S. Supreme Court ruled on February 20, 2026 that the President could not use the IEEPA to set tariffs (invalidating those tariffs), the administration announced replacement tariffs under alternative authorities, including an executive order imposing a ~10% (announced up to 15%) global surcharge on most imports; such tariffs and trade restrictions raise input costs for the bank's commercial and agricultural customers, which — alongside general bank regulation — could weaken their financial condition and the bank's credit quality.

“The Trump Administration responded by announcing the imposition of new tariffs under alternative legal authorities to replace the IEEPA tariffs, including an executive order imposing a global surcharge (tariff) of 10% on most imports, effective for 150 days.”

Because its agricultural customers are concentrated in California's mid Central Valley, Farmers & Merchants Bancorp is exposed to water-availability risk: climate conditions affect the availability of water (drainage from the Sacramento, American, Mokelumne and Stanislaus rivers), and state and federal regulators manage the resource — notably California's 2014 Sustainable Groundwater Management Act, under which Water Districts must develop compliance/recharge plans that could limit its customers' water access; reduced water availability would impair its ag borrowers' production and ability to repay loans.

“In addition to the impact that climate has on the availability of water, State and Federal regulators ultimately manage this resource, which may also impact the access of our customers' water. For example, in 2014, the State of California passed the Sustainable Groundwater Management Act.”