UNITED STATES SECURITIES AND EXCHANGE COMMISSION

 Washington, D.C. 20549

 FORM 10-K

 ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF

 THE SECURITIES EXCHANGE ACT OF 1934

 For the fiscal year ended December 31, 2023

 or

 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

 SECURITIES EXCHANGE ACT OF 1934

 For the transition period from ___________ to_____________

 Commission File Number: 000-26099

 (Exact name of registrant as specified in its charter)

 Delaware

 94-3327828

 (State or other jurisdiction of incorporation or organization)

 (I.R.S. Employer Identification No.)

 111 W. Pine Street, Lodi, California

 95240

 (Address of principal executive offices)

 (Zip Code)

 Registrant's telephone number, including area code ( 209) 367-2300

 Securities registered pursuant to Section 12(b) of the Act:

 Title of each class

 Trading Symbol(s)

 Name of each exchange on which registered

 None

 Not Applicable

 Not Applicable

 Securities registered pursuant to Section 12(g) of the Act: Common Stock, $0.01 Par Value Per Share

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

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

 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 No

 Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of
 this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No

 Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth
 company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

 Large accelerated filer

 Accelerated filer

 Non-accelerated filer

 Smaller reporting company

 Emerging growth company

 If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial
 accounting standards provided pursuant to Section 13(a) of the Exchange Act.

 Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its
 internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.

 If securities are registered
 pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.

 Indicate by check mark whether any
 of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b).

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

 The aggregate market value of the Registrant's common stock held by non-affiliates on June 30, 2023 (based on the last reported trade on June 30, 2023) was $ 648,698,000.

 The number of shares of Common Stock outstanding as of February 29, 2024: 743,031

 Documents Incorporated by Reference:

 Portions of the definitive Proxy Statement for the 2024 Annual Meeting of Stockholders to be filed with the Securities and Exchange Commission pursuant to Regulation 14A are
 incorporated by reference in Part III, Items 10 through 14.

 FORM 10-K

 Page

 Introduction

 Item 1.

 Business

 Item 1A.

 Risk Factors

 Item 1B.

 Unresolved Staff Comments

 Item 1C.

 Cybersecurity

 Item 2.

 Properties

 Item 3.

 Legal Proceedings

 Item 4.

 Mine Safety Disclosures

 Item 5.

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

 Item 6.

 Reserved

 Item 7.

 Management's Discussion and Analysis of Financial Condition and Results of Operations

 Item 7A.

 Quantitative and Qualitative Disclosures About Market Risk

 Item 8.

 Financial Statements and Supplementary Data

 Item 9.

 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

 Item 9A.

 Controls and Procedures

 Item 9B.

 Other Information

 Item 9C.

 Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

 Item 10.

 Directors, Executive Officers and Corporate Governance

 Item 11.

 Executive Compensation

 Item 12.

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

 Item 13.

 Certain Relationships and Related Transactions, and Director Independence

 Item 14.

 Principal Accounting Fees and Services

 Item 15.

 Exhibits and Financial Statement Schedules

 Item 16.

 Form 10-K Summary

 Signatures

 Table

 Introduction – Forward Looking Statements

 This Annual Report on Form 10-K may contain certain forward-looking statements within the meaning of Section 27A of the Securities Act, as amended, and Section 21E of the Securities Exchange Act. These
 forward-looking statements reflect our current views and are not historical facts. These statements may include statements regarding projected performance for periods following the date of this report. These statements can generally be identified
 by use of phrases such as "believe," "expect," "will," "seek," "should," "anticipate," "estimate," "intend," "plan," "target," "project," "commit" or other words of similar import. Similarly, statements that describe our future financial
 condition, results of operations, objectives, strategies, plans, goals or future performance and business are also forward-looking statements. Statements that project future financial conditions, results of operations, and shareholder value are
 not guarantees of performance and many of the factors that will determine these results and values are beyond our ability to control or predict. For those statements, we claim the protection of the safe harbor for forward-looking statements
 contained in the Private Securities Litigation Reform Act of 1995.

 These forward-looking statements involve known and unknown risks, uncertainties and other factors, including, but not limited to, those described in the "Risk Factors" and "Management's Discussion and Analysis of
 Financial Condition and Results of Operations" sections and other parts of this Annual Report on Form 10-K ("Form 10-K"), and our actual results may differ materially from those anticipated in these forward-looking statements. The following is a
 non-exclusive list of factors which could cause actual results to differ materially from forward-looking statements in this Form 10-K:

 changes in general economic conditions, either nationally, in California, or in our local markets;

 inflation, changes in interest rates, securities market volatility and monetary fluctuations;

 increases in competitive pressures among financial institutions and businesses offering similar products and services;

 risks associated with negative events in the banking industry in the past year, and any legislative and/or bank regulatory actions, that could potentially impact earnings, liquidity and/or the availability of capital or which could
 increase the cost of our deposit insurance by the FDIC;

 higher defaults in our loan and lease portfolio than we expect;

 changes in management's estimate of the adequacy of the allowance for credit losses;

 risks associated with our growth and expansion strategy and related costs;

 increased lending risks associated with our high concentration of real estate loans;

 legislative or regulatory changes or changes in accounting principles, policies or guidelines;

 technological changes;

 operational risks, including processing, information systems, cybersecurity, vendor problems, business interruption, and fraud;

 regulatory or judicial proceedings; and

 other factors and risks including those described under "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in this Form 10-K.

 For a discussion of these and other risks that may cause actual results to differ from expectations, please refer to "Risk Factors", "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Business" in this
 Form 10-K.

 Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated, expected, projected, intended,
 committed or believed. Please take into account that forward-looking statements speak only as of the date of this Form 10-K (or documents incorporated by reference, if applicable).

 The Company does not undertake any obligation to publicly correct or update any forward-looking statements if it later becomes aware that actual results are likely to differ materially from those expressed in such
 forward-looking statements, except as required by law.

 Table

 Item 1.

 Business

 Organizational Structure

 Farmers & Merchants Bancorp is a Delaware registered bank holding company organized in 1999. As a registered bank holding company, FMCB is subject to regulation, supervision, and examination by the Board of
 Governors of the Federal Reserve System ("Federal Reserve") and by the California Department of Financial Protection and Innovation ("DFPI"). The Company's principal business is to serve as a holding company for the Bank and for other banking or
 banking related subsidiaries, which the Company may establish or acquire. As a legal entity separate and distinct from its subsidiary, the Company's principal source of funds is, and will continue to be, dividends paid by and other funds received
 from the Bank. Legal limitations are imposed on the amount of dividends that may be paid and loans that may be made by the Bank to the Company. See "Supervision and Regulation - Dividends and Other Transfer of Funds." The Company's outstanding
 common stock as of December 31, 2023, consisted of 747,971 shares of common stock, $0.01 par value. No shares of preferred stock were issued or outstanding as of December 31, 2023.

 The Company operates all financial service activities through its wholly-owned banking subsidiary, Farmers & Merchants Bank of Central California, which was organized in 1916. The Bank was incorporated under
 the laws of the State of California as a non-Federal Reserve member, California state-chartered bank subject to primary regulation, supervision and examination by the Federal Deposit Insurance Corporation ("FDIC") and by the DFPI. The Bank's two
 wholly-owned subsidiaries are Farmers & Merchants Investment Corporation and Farmers/Merchants Corporation. Farmers & Merchants Investment Corporation is currently dormant, and Farmers/Merchants Corporation acts as trustee on deeds of
 trust originated by the Bank. The Bank's deposit accounts are insured under the Federal Deposit Insurance Act, as amended ("FDIA"), up to applicable limits. See "Supervision and Regulation – Deposit Insurance."

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

 In 2003, the Company formed a wholly-owned Connecticut statutory business trust, FMCB Statutory Trust I, for the sole purpose of issuing trust-preferred securities. See Note 9 "Long-Term Subordinated Debentures"
 located in Item 8. "Financial Statements and Supplementary Data" in this Form 10-K.

 Market Area

 The Company's primary service area is the mid Central Valley of California, including Sacramento, San Joaquin, Solano, Stanislaus and Merced counties, and the east region of the San Francisco Bay Area, including
 Napa, Alameda, and Contra Costa counties. The Company operates 29 full-service branches and 3 stand-alone ATMs. The following statistical data, for the counties in our market area, are set forth below:

 •

 Sacramento County, with branches in Sacramento, Elk Grove, Galt and Walnut Grove. This county had a Population of 1.6 million and a Median Household Income of approximately $83,985. Significant employment sectors include the
 following: government, education & health trade, and transportation & utilities. Unemployment was at 4.7%.

 Table

 •

 San Joaquin County, with branches in Lodi, Linden, Stockton, Lockeford and Manteca. This county had a Population of 0.79 million and a Median Household Income of approximately $82,837. Significant employment sectors include the
 following: trade, transportation & utilities, government, and education & health services. Unemployment was at 6.8%.

 •

 Solano County, with a branch in Rio Vista. This county had a Population of 0.45 million and a Median Household Income of approximately $97,037. Significant employment in the following industries: education and health services, trade,
 transportation and utilities, and government. Unemployment was at 5.1%.

 •

 Stanislaus County, with branches in Modesto, Riverbank and Turlock. This county had a Population of 0.55 million and a Median Household Income of approximately $74,872. Significant employment in the following sectors: trade,
 transportation & utilities, educational & health services, and government. Unemployment was at 6.9%.

 •

 Merced County, with branches in Hilmar and Merced. This county had a Population of 0.29 million and a Median Household Income of approximately $64,772. Significant employment in the following sectors: government, trade, transportation
 & utilities, and farming. Unemployment was at 10.2%.

 •

 Alameda County, with a branch in Oakland. This county had a Population of 2.8 million and a Median Household Income of approximately $122,488. Significant employment in the following sectors: professional & business services,
 educational & health services, trade, and transportation & utilities. Unemployment was at 4.5%.

 •

 Contra Costa County, with branches in Concord and Walnut Creek. This county had a Population of 2.8 million and a Median Household Income of approximately $110,455. The Significant employment in the following sectors: professional
 & business services, educational & health services, trade, and transportation & utilities. Unemployment was at 4.5%.

 •

 Napa County, with a branch in Napa. This county had a Population of 0.13 million and a Median Household Income of approximately $105,809. Significant employment in the following sectors: manufacturing, leisure & hospitality,
 trade, and educational & health services. Unemployment was at 4.1%.

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

 The Company offers a wide range of deposit products. These include checking, savings, money market, time certificates of deposit, individual retirement accounts and online banking services for both business and
 personal accounts.

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

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

 Table

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

 Competition

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

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

 The market shares of the Bank and all other banks within the eight counties in California in which we operate, at June 30, 2023 (the most recent data available), as reported by FDIC, are as follows:

 County

 F&M Bank

 Deposits

 All Banks

 Deposits

 F&M Bank

 Deposit

 Share

 San Joaquin

 $

 1,946,599

 $

 15,208,059

 12.80

 %

 Stanislaus

 1,011,213

 11,496,841

 8.80

 %

 Merced

 278,564

 3,402,530

 8.19

 %

 Solano

 194,503

 6,843,282

 2.84

 %

 Sacramento

 706,016

 71,900,266

 0.98

 %

 Contra Costa

 456,919

 53,024,409

 0.86

 %

 Napa

 19,833

 5,117,439

 0.39

 %

 Alameda

 27,412

 66,995,394

 0.04

 %

 Total

 $

 4,641,059

 $

 233,988,220

 1.98

 %

 Human Capital Resources

 As of December 31, 2023, we employed 378 full-time-equivalent employees. The Company believes that its employee relations are satisfactory. For the year ended December 31, 2023, salaries and employee benefits
 expense totaled $71 million, representing 68% of our total non-interest expense. Expenses, excluding salaries, related to education, training, recruiting and placement was approximately $500,000 for the period ended December 31, 2023.

 We are led by an experienced management team with substantial experience in the markets we serve and the financial products we offer. Our business strategy focuses on providing products and services through
 long-term relationship managers. As a result, our success depends heavily on the performance of our employees, as well as on our ability to attract, motivate and retain highly qualified employees at all levels of the Company. We believe that our
 work environment contributes to employee satisfaction and retention.

 Table

 We are committed to maintaining a work environment where every employee is treated with dignity and respect, free from the threat of discrimination and harassment. As stated in our Board approved (i) Code of
 Conduct and (ii) Prohibited Harassment Policy, we expect these same standards to apply to all stakeholders, and to our interactions with customers, vendors and independent contractors.

 We are firmly committed to providing equal employment and advancement opportunities to all qualified individuals and will not tolerate any discrimination or harassment of any kind. Team members are encouraged to
 immediately report any discrimination or harassment to their supervisor and human resources.

 Policies and Planning

 We are proud to be an Equal Opportunity Employer and enforce those values throughout all of our operations. We prohibit discrimination in hiring or advancement against any individual on the basis of race, color,
 religion, gender, sex, national origin, age, marital status, pregnancy, physical or mental disability, genetics, veteran status, sexual orientation, or any other characteristic protected by applicable law.

 We strive to ensure our team members have access to working conditions that provide a safe and healthy environment, free from work-related injuries and illnesses. Many of our locations employ badges and keypads to
 enter or to enter restricted areas of locations that have a public presence.

 Each year our annual planning and budgeting process involves an assessment of staffing levels and skills and results in the development of targets for recruitment and training. In addition, our Board of Directors
 reviews all succession plans in place for key personnel.

 Recruitment

 We strive to recruit talent from both local educational institutions and the banking industry. The Company has full-time staff dedicated to our recruitment efforts and we utilize many of the major recruitment firms
 and websites. Annually we visit local colleges and universities for job fairs and other recruitment events, which we believe allows us to identify those students who have the skills and aptitudes we need in the Company. The results of these
 efforts has been a consistent flow of candidates to fill our staffing needs as we grow.

 Compensation

 Salary and Bonuses

 We have job descriptions and salary grade ranges for all of our positions. Annually, we use outside survey firms to provide information on market pay. We also pay performance-based bonuses to our employees. We use
 different performance based bonus programs for those in business generating roles and those in administrative support roles to ensure incentives align with job responsibilities and proper segregation of duties. During 2023, total bonus
 compensation amounted to over 30% of base salaries. We believe that this "pay-for-performance" approach allows us to effectively recruit and retain key employees.

 Retirement Plans

 All employees are eligible to participate in our Profit Sharing Plan after one year of service and having worked at least 1,000 hours. The Company makes contributions equal to 5% of the employee's eligible
 compensation and discretionary contributions determined annually by the Board of Directors. This is not a matching based program; employees receive these contributions regardless of whether they make individual contributions to our 401(K)
 program. During 2023 total contributions for the Profit Sharing Plan amounted to over 10% of base salaries, a level that we believe helps us in recruitment and retention.

 Table

 Medical and Other Benefits

 In addition to competitive salaries, incentives and retirement benefits, we provide comprehensive medical, dental, and vision plans, health savings accounts, paid sick time, long-term disability, basic life and
 AD&D insurance, flexible spending accounts, and employee assistance and wellness programs.

 Training

 Job Related

 We support team members, should they wish to continue their education in subjects and fields that are directly related to our operations, activities, and objectives. We encourage our team members to pursue
 educational opportunities that will help improve job performance and professional development. To further this goal, we reimburse tuition and certain fees for satisfactory completion of approved educational courses and certain certifications.
 Included are college credit courses at accredited colleges and universities, continuing education courses and certification exams.

 Diversity, Equity, and Inclusion ("DE&I")

 To foster a deeper understanding regarding diversity and inclusion, the Company assigns all employees diversity and inclusion training - Diversity Made Simple. The
 diversity course is mandatory for all staff. As of December 31, 2023, all employees had met their diversity and inclusion training obligations. Our DE&I efforts focus on shared commitment and action across
 business lines to foster a culture of belonging and inclusion among our colleagues. Our efforts extend to our markets by strengthening our DE&I efforts in our relationships with customers and the communities that we live in and serve.
 In 2023, we used our expertise to provide loans and investments as well as financial support to promote affordable housing, provide small business lending, and advance neighborhood development through philanthropic support. These initiatives and
 investments create opportunities for individuals, families, and businesses to fully participate in and share the rewards of building economic stability in our communities.

 Harassment Prevention

 The Company assigns all employees preventative harassment training. Every two years non-supervisory employees receive one hour of harassment prevention training while
 supervisors receive two hours of harassment prevention training. Newly hired employees are assigned harassment prevention and must complete the training within six months of hire or promotion. Following the initial training, all employees must
 complete training every two years, at minimum. As of December 31, 2023, all employees had met their harassment prevention training requirements for 2023.

 Performance Evaluation

 The Company has implemented a Performance Planning, Coaching and Evaluation ("PPC&E") system that requires each year that employees and their managers establish detailed goals and objectives. Annually,
 employees are reviewed relative to their progress in achieving those goals, with the objective of reducing performance surprises and encouraging behavior that is consistent with Company objectives. We believe that this PPC&E discipline is
 important in retaining and growing our employees.

 Succession Planning

 The Company has a succession planning process led by the Board of Directors and executive management. The Board engages in strategic planning sessions, which includes board succession plans and succession plans for
 executive management and other key positions. Succession plans are designed to ensure a smooth and orderly transition. These succession plans are discussed with our regulators during the examination process.

 Government Policies

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

 Table

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

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

 Supervision and Regulation

 General

 Bank holding companies and banks are extensively regulated under both federal and state law. The regulation is intended primarily for the protection of the banking system and the Deposit Insurance Fund ("DIF")
 and clients of insured depository institutions and not for the benefit of stockholders of the Company. This supervisory and regulatory framework subjects banks and bank holding companies to regular examination by their respective regulatory
 agencies, which results in examination reports and ratings that, while not publicly available, can affect the conduct and growth of their businesses. These examinations consider not only compliance with applicable laws and regulations, but also
 capital levels, asset quality and risk, management ability and performance, earnings, liquidity, and various other factors. The regulatory agencies generally have broad discretion to impose restrictions and limitations on the operations of a
 regulated entity where the agencies determine, among other things, that such operations are unsafe or unsound, fail to comply with applicable law or are otherwise inconsistent with laws and regulations or with the supervisory policies of these
 agencies.

 Set forth below is a summary description of the material laws and regulations, which relate to the operations of the Company and the Bank. This description does not purport to be complete and is qualified in its
 entirety by reference to the applicable laws and regulations.

 The Company

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

 Table

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

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

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

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

 The Company is also a bank holding company within the meaning of the California Financial Code. As such, the Company and its subsidiaries are subject to examination by, and may be required to file reports with, the
 DFPI.

 The Company's common stock is registered with the Securities and Exchange Commission ("SEC") under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). As such, the Company is subject to the
 reporting, proxy solicitation and other requirements and restrictions of the Exchange Act.

 The Bank

 The Bank, as a California-chartered non-Federal Reserve member bank, is subject to primary supervision, periodic examination and regulation by the DFPI and the FDIC. If, as a result of an examination of the Bank,
 the FDIC should determine that the financial condition, capital resources, asset quality, earnings prospects, management, liquidity, or other aspects of the Bank's operations are unsatisfactory, or that the Bank or its management is violating or
 has violated any law or regulation, various remedies are available to the FDIC.

 Such remedies include the power to enjoin "unsafe or unsound" practices, to require affirmative action to correct any conditions resulting from any violation or practice, to issue an administrative order that can be judicially enforced, to
 direct an increase in capital, to restrict the growth of the Bank, to assess civil monetary penalties, to remove officers and directors, and ultimately to terminate the Bank's deposit insurance, which for a California-chartered bank would result
 in a revocation of the Bank's charter. The DFPI has many of the same remedial powers.

 Table

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

 The Dodd Frank Wall Street Reform and Consumer Protection Act (the "Dodd Frank Act") - The Dodd-Frank Act implemented sweeping reform across the U.S.
 financial regulatory framework, including, among other changes:

 •

 creating a Financial Stability Oversight Council tasked with identifying and monitoring systemic risks in the financial system;

 •

 creating the Consumer Financial Protection Bureau ("CFPB"), which is responsible for implementing, examining and enforcing compliance with federal consumer financial protection laws;

 •

 requiring the FDIC to make its capital requirements for insured depository institutions countercyclical, so that capital requirements increase in times of economic expansion and decrease in times of economic contraction;

 •

 imposing more stringent capital requirements on bank holding companies and subjecting certain activities, including interstate mergers and acquisitions, to heightened capital conditions;

 •

 changing the assessment base for federal deposit insurance from the amount of the insured deposits held by the depository institution to the depository institution's average total consolidated assets less tangible equity, eliminating
 the ceiling on the size of the FDIC's DIF and increasing the floor on the size of the FDIC's DIF;

 •

 eliminating all remaining restrictions on interstate banking by authorizing state banks to establish de novo banking offices in any state that would permit a bank chartered in that state to open a banking office at that location;

 •

 repealing the federal prohibitions on the payment of interest on demand deposits, thereby permitting depository institutions to pay interest on business transaction and other accounts; and

 •

 in the so-called "Volcker Rule," subject to numerous exceptions, prohibiting depository institutions and affiliates from certain investments in, and sponsorship of, hedge funds and private equity funds and from engaging in proprietary
 trading.

 Many of the law's provisions have been implemented by rules and regulations of the federal banking agencies. The law contains many provisions which have particular relevance to our business, including provisions
 that have resulted in adjustments to our FDIC deposit insurance premiums and that resulted in increased capital and liquidity requirements, increased supervision, increased regulatory and compliance risks and costs and other operational costs and
 expenses, reduced fee-based revenues and restrictions on some aspects of our operations, and increased interest expense on our demand deposits.

 On May 24, 2018, President Trump signed the Economic Growth, Regulatory Relief and Consumer Protection Act ("Economic Growth Act"), which repealed or modified certain provisions of the Dodd-Frank
 Act and eased regulations on all but the largest banks.

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 The Economic Growth Act's highlights include improving consumer access to mortgage credit that, among other things: (i) exempt banks with less than $10 billion in assets from the ability-to-repay
 requirements for certain qualified residential mortgage loans; (ii) do not require appraisals for certain transactions valued at less than $400,000 in rural areas; (iii) exempt banks and credit unions that originate fewer than 500 open-end and
 500 closed-end mortgages from the Home Mortgage Disclosure Act's ("HMDA") expanded data disclosures (the provision would not apply to nonbanks and would not exempt institutions from HMDA reporting altogether); (iv) amend the SAFE Mortgage
 Licensing Act by providing registered mortgage loan originators in good standing with 120 days of transitional authority to originate loans when moving from a federal depository institution to a non-depository institution or across state lines;
 (v) require the CFPB to clarify how Truth in Lending Disclosure ("TRID") rules apply to mortgage assumption transactions and construction-to-permanent home loans as well as outline certain liabilities related to model disclosure use; and (vi)
 provide that federal banking regulators may not impose higher capital standards on High Volatility Commercial Real Estate exposures unless they are for acquisition, development or construction ("ADC"), and clarifies ADC status. In addition, the
 Economic Growth Act's highlights also include regulatory relief for certain institutions, including among other things, simplifying capital calculations by requiring regulators to adopt a threshold for a community bank leverage ratio of between
 8% to 10%.

 Institutions under $10 billion in assets that meet such community bank leverage ratio will automatically be deemed to be "well-capitalized", although regulators retain the flexibility to determine
 that a depository institution may not qualify for the community bank leverage ratio test based on the institution's risk profile. The Economic Growth Act also exempts community banks from Section 13 of the BHCA if they have less than $10
 billion in total consolidated assets; and exempts banks with less than $10 billion in assets, and total trading assets and liabilities not exceeding more than five percent of their total assets, from the Volcker Rule restrictions on trading
 with their own capital.

 The Economic Growth Act also added certain protections for consumers, including veterans and active duty military personnel, expanded credit freezes and created an identity theft protection
 database. The Economic Growth Act also made changes applicable to bank holding companies, as it raises the threshold for automatic designation as a systemically important financial institution from $50 billion to $250 billion in assets,
 subjects banks with $100 billion to $250 billion in total assets to periodic stress tests, exempts from stress test requirements entirely banks with under $100 billion in assets, and required the federal banking regulators, within 180 days of
 passage, to raise the asset threshold under the Small Bank Holding Company Policy Statement from $1 billion to $3 billion. The Economic Growth Act also added certain protections for student borrowers.

 Whether and the extent to which the Economic Growth Act, or any other new legislation, will result in additional regulatory initiatives and policies, or modifications of existing regulations and
 policies, which may impact our business, cannot be predicted at this time. No current assurance may be given that any other such legislative changes will not have a negative impact on the results of operations and financial condition of the
 Company and the Bank.

 Capital Standards

 The federal banking agencies have risk-based capital adequacy guidelines intended to provide a measure of capital adequacy that reflects the degree of risk associated with a banking organization's
 operations, both for transactions reported on the balance sheet as assets and for transactions, such as letters of credit and recourse arrangements, that are recorded as off-balance sheet items. In 2013, the Federal Reserve, FDIC, and Office of
 the Comptroller of the Currency issued final rules (the "Basel III Capital Rules") establishing a new comprehensive capital framework for U.S. banking organizations.

 The rules implement the Basel Committee's December 2010 framework, commonly referred to as Basel III, for strengthening international capital standards, as well as implementing certain provisions
 of the Dodd-Frank Act.

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 The Basel III Capital Rules became effective for the Company and the Bank on January 1, 2015 (subject to phase-in periods for some of their components). The Basel III Capital Rules: (i) introduce
 a new capital measure called Common Equity Tier 1 ("CET1"), and a related regulatory capital ratio of CET1 to risk-weighted assets; (ii) specify that Tier 1 capital consists of CET1 and "Additional Tier 1 capital" instruments, which are
 instruments treated as Tier 1 instruments under the prior capital rules that meet certain revised requirements; (iii) mandate that most deductions or adjustments to regulatory capital measures be made to CET1 and not to the other components of
 capital; and (iv) expand the scope of the deductions from and adjustments to capital, as compared to existing regulations. Under the Basel III Capital Rules, for most banking organizations, the most common form of additional Tier 1 capital is
 non-cumulative perpetual preferred stock and the most common form of Tier 2 capital is subordinated notes and a portion of the allowance for credit losses, in each case, subject to the Basel III Capital Rules' specific requirements.

 Under the Basel III Capital Rules, the following are the minimum capital ratios applicable to the Company and the Bank:

 •

 4.0% Tier 1 leverage ratio;

 •

 4.5% CET1 to risk-weighted assets, plus the capital conservation buffer, effectively resulting in a minimum ratio of CET1 to risk-weighted assets of at least 7%;

 •

 6.0% Tier 1 capital to risk-weighted assets, plus the capital conservation buffer, effectively resulting in a minimum Tier 1 capital ratio of at least 8.5%; and

 •

 8.0% total capital to risk-weighted assets, plus the capital conservation buffer, effectively resulting in a minimum total capital ratio of at least 10.5%.

 The Basel III Capital Rules provide for a number of deductions from and adjustments to CET1. These include, for example, the requirement that: (i) mortgage servicing rights, (ii) deferred tax
 assets arising from temporary differences that could not be realized through net operating loss carrybacks, and (iii) significant investments in non-consolidated financial entities be deducted from CET1 to the extent that any one such category
 exceeds 10% of CET1 or all such items, in the aggregate, exceed 15% of CET1. Under the Basel III Capital Rules, the effects of certain accumulated other comprehensive income or loss items are not excluded for the purposes of determining
 regulatory capital ratios; however, non-advanced approaches banking organizations (i.e., banking organizations with less than $250 billion in total consolidated assets or with less than $10 billion of on-balance sheet foreign exposures),
 including the Company and the Bank, may make a one-time permanent election to exclude these items. The Company and the Bank made this election in 2015 in order to avoid significant variations in the level of capital depending upon the impact of
 interest rate fluctuations on the fair value of its available-for-sale investment securities portfolio, changes of which are included in accumulated other comprehensive income or loss.

 The Basel III Capital Rules prescribe a standardized approach for risk weightings that expands the risk weighting categories from the previous four Basel I-derived categories (0%, 20%, 50% and
 100%) to a larger and more risk-sensitive number of categories, generally ranging from 0% for U.S. Government and agency securities, to 600% for certain equity exposures, depending on the nature of the assets. The Basel III capital rules
 generally result in higher risk weights for a variety of asset classes. Additional aspects of the Basel III Capital Rules that are relevant to the Company and the Bank include:

 •

 consistent with the Basel I risk-based capital rules, assigning exposures secured by single-family residential properties to either a 50% risk weight for first-lien mortgages that meet prudent underwriting standards or a 100% risk
 weight category for all other mortgages;

 •

 providing for a 20% credit conversion factor for the unused portion of a commitment with an original maturity of one year or less that is not unconditionally cancellable (set at 0% under the Basel I risk-based capital rules);

 •

 assigning a 150% risk weight to all exposures that are nonaccrual or 90 days or more past due (set at 100% under the Basel I risk-based capital rules), except for those secured by single-family residential properties, which will be
 assigned a 100% risk weight, consistent with the Basel I risk-based capital rules;

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 •

 applying a 150% risk weight instead of a 100% risk weight for certain high volatility commercial real estate acquisition, development and construction loans; and

 •

 applying a 250% risk weight to the portion of mortgage servicing rights and deferred tax assets arising from temporary differences that could not be realized through net operating loss carrybacks that are not deducted from CET1 capital
 (set at 100% under the Basel I risk-based capital rules).

 With respect to the Bank, the Basel III capital rules also revise the prompt corrective action regulations pursuant to Section 38 of the FDIA.

 As of December 31, 2023, the Company's and the Bank's capital ratios exceeded the minimum capital adequacy guideline percentage requirements of the federal banking agencies for a "well
 capitalized" institution under the Basel III capital rules on a fully phased-in basis.

 In December 2017, the Basel Committee published standards that it described as the finalization of the Basel III post-crisis regulatory reforms, which standards are commonly referred to as Basel
 IV. Among other things, these standards revise the Basel Committee's standardized approach for credit risk (including the recalibration of the risk weights and the introduction of new capital requirements for certain "unconditionally
 cancellable commitments," such as unused credit card lines of credit) and provides a new standardized approach for operational risk capital.

 Under the Basel framework, these standards were generally effective on January 1, 2022, with an aggregate output floor phasing in through January 1, 2027.

 On July 27, 2023, the federal banking agencies issued a proposed rule to implement the final components of the Basel III standards set by the Basel Committee on Banking Supervision in 2017. The
 proposed rule, which would not apply to the Company and the Bank as proposed, would substantially revise the existing regulatory capital framework for institutions with $100 billion or more of assets.

 Under the current U.S. capital rules, operational risk capital requirements and a capital floor apply only to advanced approaches institutions, and not to the Bank. The impact of Basel IV on us
 will depend on how it is implemented by the federal bank regulators.

 Prompt Corrective Action ("PCA")

 The FDIA requires federal banking agencies to take PCA in respect of depository institutions that do not meet minimum capital requirements. The FDIA includes the following five capital tiers:
 "well capitalized," "adequately capitalized," "undercapitalized," "significantly undercapitalized," and "critically undercapitalized." A depository institution's capital tier will depend upon how its capital levels compare with various relevant
 capital measures and certain other factors, as established by regulation. The Basel III Capital Rules revised the PCA requirements effective January 1, 2015. Under the revised PCA provisions of the FDIA, an insured depository institution
 generally will be classified in the following categories based on the capital measures indicated:

 Minimum

 to be

 Categorized

 as

 "Well

 Capitalized"

 Minimum

 to be

 Categorized

 as

 "Adequately

 Capitalized"

 Under-capitalized

 Significantly

 Under-

 capitalized

 Critically

 Under-

 capitalized

 10.00

 %+

 8.00

 %+

 < 8.00%

 < 6.00%

 N/A

 8.00

 %+

 6.00

 %+

 < 6.00%

 < 4.00%

 N/A

 6.50

 %+

 4.50

 %+

 < 4.50%

 < 3.00%

 N/A

 5.00

 %+

 4.00

 %+

 < 4.00%

 < 3.00%

 N/A

 Tangible equity to assets

 N/A

 N/A

 N/A

 N/A

 < 2.00%

 Supplemental leverage ratio

 N/A

 3.00

 %+

 < 3.00%

 N/A

 N/A

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 An institution may be downgraded to, or deemed to be in, a capital category that is lower than indicated by its capital ratios, if it is determined to be operating in an unsafe or unsound
 condition or if it receives an unsatisfactory examination rating with respect to certain matters. A bank's capital category is determined solely for the purpose of applying PCA regulations and the capital category may not constitute an accurate
 representation of the bank's overall financial condition or prospects for other purposes.

 The FDIA generally prohibits a depository institution from making any capital distributions (including payment of a dividend) or paying any management fee to its parent holding company, if the
 depository institution would thereafter be "undercapitalized." "Undercapitalized" institutions are subject to growth limitations and are required to submit capital restoration plans. If a depository institution fails to submit an acceptable
 plan, it is treated as if it is "significantly undercapitalized." "Significantly undercapitalized" depository institutions may be subject to a number of requirements and restrictions, including orders to sell sufficient voting stock to become
 "adequately capitalized," requirements to reduce total assets, and cessation of receipt of deposits from correspondent banks. "Critically undercapitalized" institutions are subject to the appointment of a receiver or conservator by the bank
 regulators.

 The capital classification of a bank holding company and a bank affects the frequency of regulatory examinations, the bank holding company's and the bank's ability to engage in certain activities
 and the deposit insurance premium paid by the bank to the FDIC. As of December 31, 2023, we met the requirements to be classified as "well capitalized" based upon the aforementioned ratios for purposes of the PCA regulations.

 The Community Bank Leverage Ratio

 On November 4, 2019, the federal banking agencies jointly issued a final rule that provides for an optional, simplified measure of capital adequacy, known as the community bank leverage ratio
 ("CBLR") framework, for qualifying community banking organizations consistent with Section 201 of the Economic Growth Act. The CBLR framework is designed to reduce the capital burden by removing the requirements for calculating and reporting
 risk-based capital ratios for qualifying community banking organizations that opt into the framework. The final rule was effective on January 1, 2020.

 In order to qualify for the CBLR framework, a community banking organization must have a tier 1 leverage ratio of greater than 9%, less than $10 billion in total consolidated assets,
 off-balance-sheet exposures of 25% or less of total consolidated assets, and trading assets and liabilities of 5% or less of total consolidated assets. A qualifying community banking organization that opts into the CBLR framework and meets all
 requirements under the framework will be considered to have met the "well capitalized" ratio requirements under the PCA regulations. Such a community banking organization would not be subject to other risk-based and leverage capital
 requirements (including the Basel III and Basel IV requirements). The CBLR is determined by dividing a financial institution's tangible equity capital by its average total consolidated assets. The rule describes what is included in tangible
 equity capital and average total consolidated assets. The CBLR framework was available for banks to use in their March 31, 2020, call report. A CBLR bank that ceases to meet any of the qualifying criteria in a future period but maintains a
 leverage ratio greater than 8% will be allowed a grace period of two reporting periods to satisfy the CBLR qualifying criteria or to otherwise comply with the generally applicable capital requirements. Further, a CBLR bank may opt out of the
 framework at any time, without restriction, by reverting to the generally applicable capital requirements. The Company and Bank did not opt into the CBLR framework.

 Anti-Money Laundering and Office of Foreign Assets Control Regulation

 Title III of the United and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (the "Patriot Act"), is designed to deny terrorists and criminals the
 ability to obtain access to the U.S. financial system and has significant implications for depository institutions, brokers, dealers and other businesses involved in the transfer of money.

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 The Patriot Act mandates financial services companies to have policies and procedures with respect to measures designed to address any or all of the following matters: (i) customer identification programs; (ii)
 money laundering; (iii) terrorist financing; (iv) identifying and reporting suspicious activities and currency transactions; (v) currency crimes; and (vi) cooperation between financial institutions and law enforcement authorities. Regulatory
 authorities routinely examine financial institutions for compliance with these obligations, and failure of a financial institution to maintain and implement adequate programs to combat money laundering and terrorist financing, or to comply with
 all of the relevant laws or regulations, could have serious legal and reputational consequences for the institution, including causing applicable bank regulatory authorities not to approve merger or acquisition transactions when regulatory
 approval is required or to prohibit such transactions even if approval is not required. Regulatory authorities have imposed cease and desist orders and civil money penalties against institutions found to be violating these obligations.

 The U.S. Treasury's Office of Foreign Assets Control ("OFAC") administers and enforces economic and trade sanctions against targeted foreign countries and regimes under authority of various laws, including
 designated foreign countries, nationals and others. OFAC publishes lists of specially designated targets and countries. Financial institutions are responsible for, among other things, blocking accounts of and transactions with such targets and
 countries, prohibiting unlicensed trade and financial transactions with them and reporting blocked transactions after their occurrence. Banking regulators examine banks for compliance with the economic sanctions regulations administered by OFAC,
 and failure of a financial institution to maintain and implement adequate OFAC programs, or to comply with all of the relevant laws or regulations, could have serious legal and reputational consequences for the institution.

 Privacy Restrictions

 The Gramm-Leach-Bliley Act ("GLBA") requires financial institutions in the U.S. to provide certain privacy disclosures to customers and consumers, to comply with certain restrictions on the sharing and usage of
 personally identifiable information, and to implement and maintain commercially reasonable customer information safeguarding standards.

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

 Certain state laws and regulations designed to protect the privacy and security of customer information also apply to us and our subsidiaries, including laws requiring notification to affected individuals and
 regulators of data security breaches and laws prohibiting sharing of customer information without the customer's prior permission.

 In June 2018, the State of California enacted The California Consumer Privacy Act of 2018 ("CCPA"). This law became effective on January 1, 2020, and provides consumers with expansive rights and controls over their
 personal information which is obtained by or shared with "covered businesses", which includes the Bank and most other banking institutions subject to California law. The CCPA gives consumers the right to request disclosure of information
 collected about them and whether that information has been sold or shared with others, the right to request deletion of personal information subject to certain exceptions, the right to opt out of the sale of the consumer's personal information
 and the right not to be discriminated against because of choices regarding the consumer's personal information. The CCPA provides for certain monetary penalties and for its enforcement by the California Attorney General or consumers whose rights
 under the law are not observed. It also provides for damages as well as injunctive or declaratory relief if there has been unauthorized access, theft or disclosure of personal information due to failure to implement reasonable security
 procedures. The CCPA contains several exemptions, including a provision to the effect that the CCPA does not apply where the information is collected, processed, sold or disclosed pursuant to the GLBA if the GLBA is in conflict with the CCPA. In
 November 2020, California voters approved state-wide Proposition 24, also known as the California Privacy Rights and Enforcement Act of 2020 (the "CPREA") which expanded and amended certain provisions of the CCPA and created the California
 Privacy Protection Agency to enforce privacy rights for Californians and impose fines for violations of such rights. The CPREA requires businesses to not share a consumer's personal information upon the consumer's request, provides consumers with
 an opt-out option for having their sensitive personal information used or disclosed for advertising or marketing, to obtain permission for collecting data on certain minors, and to correct a consumer's inaccurate information upon the consumer's
 request. It also removed the ability of businesses to remedy violations before being penalized for violations and increased the penalties for such violations. Most of the provisions of the CPREA took effect in 2023 but some portions, such as the
 creation of the new state agency, went into effect immediately. While GLBA-regulated nonpublic, personal information generally is exempt under the CCPA, the CCPA and certain other state laws apply to the personal information of representatives of
 any business contacts that the Bank engages with who are California residents, employees who are California residents, and any other personal information that the Bank collects outside of the scope of GLBA, such as with respect to certain data
 collected from visitors to our website. The impact of these laws on the business of the Bank could result in increased operating expenses as well as additional exposure to the risk of litigation by or on behalf of consumers.

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 Dividends and Other Transfer of Funds

 Dividends from the Bank constitute the principal source of cash to the Company. The Company is a legal entity separate and distinct from the Bank. The Bank is subject to various statutory and regulatory
 restrictions on its ability to pay dividends to the Company. Under such restrictions, the amount available for payment of dividends to the Company by the Bank totaled $157.7 million at December 31, 2023. During 2023, the Bank paid $33.3 million
 in dividends to the Company of which $12.9 million was used for cash dividends to shareholders, $16.3 million was allocated for share repurchases and $4.1 million to cover expenses and maintain a cash reserve.

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

 Transactions with Affiliates

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

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

 Also, the Bank and its operating subsidiaries may engage in transactions with affiliates only on terms and under conditions that are substantially the same, or at least as favorable to the Bank or its subsidiaries,
 as those prevailing at the time for comparable transactions with (or that in good faith would be offered to) non-affiliated companies. California law also imposes certain restrictions with respect to transactions with affiliates. Additionally,
 limitations involving the transactions with affiliates may be imposed on the Bank under the PCA provisions of federal law. See "Prompt Corrective Action."

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 Safety and Soundness Standards

 The federal banking agencies have adopted guidelines that establish operational and managerial standards to promote the safety and soundness of federally insured depository institutions. The
 guidelines set forth standards for internal controls, information systems, internal audit systems, loan documentation; credit underwriting, interest rate exposure, asset growth, compensation, fees and benefits, asset quality and earnings.

 In general, the safety and soundness guidelines prescribe the goals to be achieved in each area, and each institution is responsible for establishing its own procedures to achieve those goals. If
 an institution fails to comply with any of the standards set forth in the guidelines, the financial institution's primary federal regulator may require the institution to submit a plan for achieving and maintaining compliance. If a financial
 institution fails to submit an acceptable compliance plan, or fails in any material respect to implement a compliance plan that has been accepted by its primary federal regulator, the regulator is required to issue an order directing the
 institution to cure the deficiency. Until the deficiency cited in the regulator's order is cured, the regulator may restrict the financial institution's rate of growth, require the financial institution to increase its capital, restrict the
 rates the institution pays on deposits or require the institution to take any action the regulator deems appropriate under the circumstances. Noncompliance with the standards established by the safety and soundness guidelines may also
 constitute grounds for other enforcement action by the federal bank regulatory agencies, including cease and desist orders and civil money penalty assessments.

 Since the financial crisis of 2008-2009, the bank regulatory agencies have increasingly emphasized the importance of sound risk management processes and strong internal controls when evaluating
 the activities of the financial institutions they supervise. Properly managing risks has been identified as critical to the conduct of safe and sound banking activities and has become even more important as new technologies, product innovation,
 and the size and speed of financial transactions have changed the nature of banking markets. The agencies have identified a spectrum of risks facing a banking institution including, but not limited to, credit, market, liquidity, operational,
 legal, and reputational risk.

 In particular, regulatory pronouncements in the past few years have focused on operational risk, which arises from the potential that inadequate information systems, operational problems, breaches
 in internal controls, fraud, or unforeseen catastrophes will result in unexpected losses. New products and services, third-party risk management and cyber-security are critical sources of operational risk that financial institutions are
 expected to address in the current environment. The Bank is expected to have active board and senior management oversight; adequate policies, procedures, and limits; adequate risk measurement, monitoring, and management information systems; and
 comprehensive internal controls.

 Deposit Insurance

 As an FDIC-insured institution, the Bank is required to pay deposit insurance premium assessments to the FDIC. The premiums fund the Deposit Insurance Fund ("DIF"). The FDIC assesses a quarterly
 deposit insurance premium on each insured institution based on risk characteristics of the institution and may also impose special assessments in emergency situations. Effective July 1, 2016, the FDIC changed the deposit insurance assessment
 system for banks, such as the Bank, with less than $10 billion in assets that have been federally insured for at least five years. Among other changes, the FDIC eliminated risk categories for such banks and now uses the "financial ratios method"
 to determine assessment rates for all such banks. Under the financial ratios method, the FDIC determines assessment rates based on a combination of financial data and supervisory ratings that estimate a bank's probability of failure within three
 years. The assessment rate determined by considering such information is then applied to the amount of the institution's average assets minus average tangible equity to determine the institution's insurance premium.

 On October 18, 2022, the FDIC adopted a final rule, applicable to all insured depository institutions to increase the initial base deposit insurance assessment rate schedules uniformly
 by two basis points consistent with the Amended Restoration Plan approved by the FDIC on June 21, 2022. The FDIC indicated that it was taking this action in order to restore the DIF reserve ratio to the required statutory minimum of 1.35% by the statutory deadline of September 30, 2028. The FDIC said that the reserve ratio had declined below this level because of the increase in insured
 deposits since the start of the COVID-19 pandemic and other factors that affect the level of the DIF. Under the final rule, the increase in rates began with the first quarterly assessment period of 2023 and will remain in effect unless and
 until the reserve ratio meets or exceeds 2% in order to support growth in the DIF in progressing toward the FDIC's long-term goal of a 2% reserve ratio.

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 On November 16, 2023, the FDIC issued a final rule to implement a special assessment to recover the loss to the DIF associated with protecting uninsured depositors following the closures in early 2023 of Silicon
 Valley Bank and Signature Bank. Under the final rule, the assessment base for an insured depository institution will be equal to the institution's estimated uninsured deposits as of December 31, 2022, adjusted to exclude the first $5 billion in
 estimated uninsured deposits. Under the final rule, the FDIC will collect the special assessment at an annual rate of 13.4 basis points beginning with the first quarterly assessment period of 2024 and will continue to collect special assessments
 for an anticipated total of eight quarterly assessment periods. This special assessment does not apply to the Bank.

 The Bank's FDIC premiums were $2.4 million, $1.4 million, and $1.2 million for the three years ended December 31, 2023, 2022, and 2021, respectively. Future increases in insurance premiums could have adverse
 effects on the operating expenses and results of operations of the Company. Management cannot predict what the FDIC insurance assessment rates will be in the future.

 Insurance of a bank's deposits may be terminated by the FDIC upon a finding that the institution has engaged in unsafe or unsound practices, is in an unsafe or unsound condition to continue operations, or has
 violated any applicable law, regulation, rule, order, or condition imposed by the FDIC or the Bank's primary regulator. Management of the Company is not aware of any practice, condition or violation that might lead to termination of the Company's
 deposit insurance.

 Community Reinvestment Act ("CRA") and Fair Lending

 The Bank is subject to certain fair lending requirements involving lending, investing, and other CRA activities. CRA requires each insured depository institution to identify the communities served by the
 institution's offices and to identify the types of credit and investments the institution is prepared to extend within such communities including low and moderate-income neighborhoods. It also requires the institution's regulators to assess the
 institution's performance in meeting the credit needs of its community and to consider such assessment in reviewing applications for mergers, acquisitions, relocation of existing branches, opening of new branches, and other transactions. A bank
 may be subject to substantial penalties and corrective measures for a violation of certain fair lending laws.

 A bank's compliance with the CRA is assessed using an evaluation system, which bases CRA ratings on an institution's lending, service and investment performance. An unsatisfactory rating may be the basis for
 denying a merger application. The Bank's latest CRA examination was completed by the FDIC in August 2022 and the Bank received an overall Outstanding rating in complying with its CRA obligations.

 On October 24, 2023, the federal banking agencies jointly issued a final rule to strengthen and modernize the existing CRA regulations. Under the final rule, the agencies will evaluate a bank's CRA performance
 based upon the varied activities that it conducts and the communities in which it operates. CRA evaluations and data collection requirements will be tailored based on bank size and type. The Bank would be considered a large bank under the final
 rule (with assets greater than $2 billion) and therefore will be evaluated under new lending, retail services and products, community development financing, and community development services tests. The final rule includes CRA assessment areas
 associated with mobile and online banking, and new metrics and benchmarks to assess retail lending performance. In addition, the final rule emphasizes smaller loans and investments that can have a high impact and be more responsive to the needs
 of low- and moderate-income communities. The rule imposes new data collection requirements on large banks, although certain data collection and reporting requirements will be limited to larger banks with assets greater than $10 billion. The final
 rule will take effect on April 1, 2024; however, compliance with the majority of the final rule's provisions will not be required until January 1, 2026, and the data reporting requirements of the final rule will not take effect until January 1,
 2027.

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 Consumer Protection Regulations

 Banks and other financial institutions are subject to numerous laws and regulations intended to protect consumers in their transactions with banks. These laws include, among others, laws regarding
 unfair and deceptive acts and practices and usury laws, as well as the following consumer protection statutes: Truth in Lending Act, Truth in Savings Act, Electronic Fund Transfer Act, Expedited Funds Availability Act, Equal Credit Opportunity
 Act, Fair and Accurate Credit Transactions Act, Fair Housing Act, Fair Credit Reporting Act, Fair Debt Collection Practices Act, GLBA, Home Mortgage Disclosure Act, Right to Financial Privacy Act, Servicemembers Civil Relief Act, Military
 Lending Act and Real Estate Settlement Procedures Act.

 Many states and local jurisdictions have consumer protection laws analogous, and in addition, to those listed above. These federal, state and local laws regulate the manner in which financial
 institutions deal with customers when taking deposits, making loans or conducting other types of transactions. Failure to comply with these laws and regulations could give rise to regulatory sanctions, customer rescission rights, action by state
 and local attorneys general and civil or criminal liability. Failure to comply with consumer protection requirements may also result in our failure to obtain any required bank regulatory approval for merger or acquisition transactions we may wish
 to pursue or our prohibition from engaging in such transactions even if approval is not required.

 The structure of federal consumer protection regulation applicable to all providers of consumer financial products and services changed significantly on July 21, 2011, when the CFPB commenced
 operations to supervise and enforce federal consumer protection laws. The consumer protection provisions of the Dodd-Frank Act and the examination, supervision and enforcement of those laws and implementing regulations by the CFPB have created
 a more intense and complex environment for consumer finance regulation. The CFPB has significant authority to implement and enforce federal consumer protection laws and new requirements for financial services products provided for in the
 Dodd-Frank Act, as well as the authority to identify and prohibit unfair, deceptive or abusive acts and practices. The review of products and practices to prevent such acts and practices is a continuing focus of the CFPB, and of banking
 regulators more broadly. The ultimate impact of this heightened scrutiny is uncertain but could result in changes to pricing, practices, products and procedures. It could also result in increased costs related to regulatory oversight,
 supervision and examination, additional remediation efforts and possible penalties. In addition, the Dodd-Frank Act provides the CFPB with broad supervisory, examination and enforcement authority over various consumer financial products and
 services, including the ability to require reimbursements and other payments to customers for alleged legal violations and to impose significant penalties, as well as injunctive relief that prohibits lenders from engaging in allegedly unlawful
 practices. The CFPB also has the authority to obtain cease and desist orders providing for affirmative relief or monetary penalties. The Dodd-Frank Act does not prevent states from adopting stricter consumer protection standards. State
 regulation of financial products and potential enforcement actions could also adversely affect our business, financial condition or results of operations.

 The CFPB is authorized to issue rules for both bank and non-bank companies that offer consumer financial products and services, subject to consultation with the prudential banking regulators. In
 general, however, banks with assets of $10 billion or less, such as the Bank, will continue to be examined for consumer compliance by their primary bank regulator.

 Notice and Approval Requirements Related to Control

 Banking laws impose notice, approval and ongoing regulatory requirements on any stockholder or other party that seeks to acquire direct or indirect "control" of an FDIC-insured depository institution. These laws
 include the BHCA and the Change in Bank Control Act. Among other things, these laws require regulatory filings by a stockholder or other party that seeks to acquire direct or indirect "control" of an FDIC-insured depository institution or bank
 holding company. The determination whether an investor "controls" a depository institution is based on all of the facts and circumstances surrounding the investment. As a general matter, a party is deemed to control a depository institution or
 other company if the party owns or controls 25% or more of any class of voting stock. Subject to rebuttal, a party may be presumed to control a depository institution or other company if the investor owns or controls 10% or more of any class of
 voting stock. Ownership by family members, affiliated parties, or parties acting in concert, is typically aggregated for these purposes. If a party's ownership of the Company were to exceed certain thresholds, the investor could be deemed to
 "control" the Company for regulatory purposes. This could subject the investor to regulatory filings or other regulatory consequences.

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 In addition, except under limited circumstances, bank holding companies are prohibited from acquiring, without prior approval:

 •

 control of any other bank or bank holding company or all or substantially all the assets thereof; or

 •

 more than 5% of the voting shares of a bank or bank holding company which is not already a subsidiary.

 Incentive Compensation

 In 2010, the federal bank regulatory agencies issued comprehensive guidance intended to ensure that the incentive compensation policies of banking organizations do not undermine the safety and
 soundness of those organizations by encouraging excessive risk-taking. The incentive compensation guidance sets expectations for banking organizations concerning their incentive compensation arrangements and related risk management, control and
 governance processes. The incentive compensation guidance, which covers all employees that have the ability to materially affect the risk profile of an organization, either individually or as part of a group, is based upon three primary
 principles: (1) balanced risk-taking incentives; (2) compatibility with effective controls and risk management; and (3) strong corporate governance. Any deficiencies in compensation practices that are identified may be incorporated into the
 organization's supervisory ratings, which can affect its ability to make acquisitions or take other actions. In addition, under the incentive compensation guidance, a banking organization's federal supervisor may initiate enforcement action if
 the organization's incentive compensation arrangements pose a risk to the safety and soundness of the organization.

 In 2016, several federal financial agencies (including the Federal Reserve and FDIC) re-proposed restrictions on incentive-based compensation pursuant to Section 956 of the Dodd-Frank Act for
 financial institutions with $1 billion or more in total consolidated assets.

 For institutions with at least $1 billion but less than $50 billion in total consolidated assets, the proposal would impose principles-based restrictions that are broadly consistent with existing
 interagency guidance on incentive-based compensation. Such institutions would be prohibited from entering into incentive compensation arrangements that encourage inappropriate risks by the institution: (i) by providing an executive officer,
 employee, director, or principal shareholder with excessive compensation, fees, or benefits; or (ii) that could lead to material financial loss to the institution. The comment period for these proposed regulations has closed, but a final rule
 has not been published. Depending upon the outcome of the rule making process, the application of this rule to us could require us to revise our compensation strategy, increase our administrative costs and adversely affect our ability to
 recruit and retain qualified employees. Further, as discussed above, the Basel III Capital Rules limit discretionary bonus payments to bank executives if the institution's regulatory capital ratios fail to exceed certain thresholds that started
 being phased in on January 1, 2016.

 It is currently anticipated that a third rulemaking document on incentive-based compensation arrangements for financial institutions could be proposed by these federal banking agencies in 2024.

 Available Information

 Company reports filed with the SEC, including the Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements and ownership reports filed by directors, executive officers and principal
 stockholders, can be accessed free of charge through the Company's website at  as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. The link to the SEC is
 on the About Us page. The Company's reports may also be accessed at the SEC's Internet website (

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 Item 1A.

 Risk Factors

 An investment in our common stock is subject to risks inherent in our business. The material risks and uncertainties that management believes may affect our business are described below. Before
 making an investment decision, you should carefully consider the risks and uncertainties described below together with all of the other information included or incorporated by reference in this Form 10-K. The risks and uncertainties described
 below are not the only ones facing our business. Additional risks and uncertainties that management is not aware of or focused on or that management currently deems immaterial may also impair our business operations. If any of the following risks
 actually occur, our financial condition and results of operations could be materially and adversely affected. If this were to happen, the value of our common stock could decline significantly, and you could lose all or part of your investment.

 Risks Relating to the Industry and Geographic Area in Which We Operate and the U.S. Economy

 As a financial services company, our business and operations may be adversely affected by weak economic conditions. Our business operations, which
 primarily consist of lending money to clients in the form of loans, borrowing money from clients in the form of deposits and investing in securities, are sensitive to general business and economic conditions in the United States and California.
 The tightening of the Federal Reserve's monetary policies, including repeated and aggressive increases in target range for the federal funds rate as well as the conclusion of the Federal Reserve's tapering of asset purchases, together with
 ongoing economic and geopolitical instability, increases the risk of an economic recession. Although forecasts have varied, many economists are projecting that, while indicators of U.S. economic performance, such as income growth, may be strong
 and levels of inflation may continue to decrease, the U.S. economy may be flat or experience a modest decrease in gross domestic output in 2024 while inflation is expected to remain elevated relative to historic levels in the coming quarters. If
 the U.S. economy weakens, our growth and profitability from our lending, deposit and investment operations could be constrained and our asset quality, deposit levels, loan demand and results of operations may be adversely affected. In addition,
 economic conditions in foreign countries could affect the stability of global financial markets, which could hinder U.S. economic growth. Our business is also significantly affected by monetary and related policies of the U.S. federal government
 and its agencies. Changes in any of these policies are influenced by macroeconomic conditions and other factors that are beyond our control. Adverse economic conditions and government policy responses to such conditions could have a material
 adverse effect on our financial condition and operations. Our clients businesses are also impacted by the strong US dollar and the related impact to commodity prices and exports.

 A large portion of our loan portfolio is tied to the real estate market where we operate and we may be negatively impacted by downturns in that market. A
 significant percentage of our loans are real estate related, consisting of loans for construction and land development projects, and for the purchase, improvement or refinancing of residential and commercial real estate. A downturn in the real
 estate market could increase loan delinquencies, defaults and foreclosures, and significantly impair the value of our collateral and our ability to sell the collateral upon foreclosure. Real estate collateral provides an alternate source of
 repayment in the event of default by the client and may deteriorate in value during the time the credit is extended. If values decline, it is also more likely that we would be required to increase our allowance for credit losses. If during a
 period of reduced real estate values we are required to liquidate the property collateralizing a loan to satisfy the debt or to increase our allowance for credit losses, it could materially reduce our profitability and adversely affect our
 financial condition.

 Although only 5.8% of our loan portfolio consisted of real estate construction, and acquisition and land development loans as of December 31, 2023, such loans generally have a higher degree of risk than long-term
 financing of existing properties because repayment depends on the completion of the project and usually on the sale or long term financing of the property. In addition, these loans are often "interest-only loans," which normally require only the
 payment of interest accrued prior to maturity. Interest-only loans carry greater risk than other loans because no principal is paid prior to maturity. This risk is particularly apparent during periods of rising interest rates and declining real
 estate values. If there is a significant decline in the real estate market due to a material increase in interest rates or for other reasons, many of these loans could default and result in foreclosure. If we are forced to foreclose on a project
 prior to completion, we may not be able to recover the entire unpaid portion of the loan or we may be required to fund additional money to complete the project or hold the property for an indeterminate period. In addition, real estate exposes us
 to incurring costs and liabilities for environmental contamination and remediation. Any of these outcomes may result in losses and reduce our earnings.

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 The FDIC has given guidance recommending that if the sum of (i) certain categories of CRE loans and (ii) acquisition, development and construction loans ("ADC loans") exceeds 300% of total risk-based capital, or if
 ADC loans exceed 100% of total risk-based capital, heightened risk management practices should be employed to mitigate risk. As of December 31, 2023, our ratio of the sum of CRE and ADC loans to total risk-based capital was 182% and our ratio of
 ADC loans to total risk-based capital was 36.47%. Our concentration in ADC loans is cyclical and tends to increase in the second and third quarters of each year as demand for ADC loans increases. An increase in ADC loan concentration could cause
 our ratio for ADC loans to increase and even exceed the FDIC's guidance. We have exceeded these guidance ratios at times in the past and may do so in the future. We actively monitor and believe that we effectively manage our CRE and ADC loan
 concentrations. If we exceed the FDIC's guidance and do not effectively manage the risk of our CRE and ADC loans, we may be subject to regulatory scrutiny, including a requirement to raise additional capital, reduce our loan concentrations, or
 undertake other remedial actions.

 We could suffer material credit losses if we do not appropriately manage our credit risk. There are risks inherent in making any loan, including risks
 in dealing with individual clients, risks of non-payment, risks resulting from uncertainties as to the future value of collateral and risks resulting from changes in economic and industry conditions. Changes in the economy may cause the
 assumptions that we made at origination to change and may cause clients to be unable to make payments on their loans. There is no assurance that our credit risk monitoring and loan approval procedures are or will be adequate to address the
 inherent risks associated with lending. Any failure to manage such risks may materially adversely affect our financial condition and results of operations.

 The small to medium-sized businesses, including agricultural businesses, that we lend to may have fewer resources to weather adverse business and economic
 developments, which may impair their ability to repay a loan, and such impairment could adversely affect our operations and financial condition. Our business strategy targets primarily small to
 medium-sized businesses, which frequently have smaller market shares than their competition, may be more vulnerable to economic downturns, often need substantial additional capital to expand or compete, and may experience substantial volatility
 in operating results, any of which may impair a client's ability to repay a loan.

 The success of a small to medium-sized business often depends on the management skills, talents and efforts of one or a small number of people, and the death, disability or resignation of one or more of these
 people could have a material adverse impact on the business and its ability to repay its loan. If general economic conditions negatively affect California and small to medium-sized businesses are adversely affected or our clients are otherwise
 affected by adverse business conditions or developments, our business, financial condition and operations could be adversely affected.

 Our profitability depends on interest rates generally, and we may be adversely affected by changes in market interest rates. Our profitability depends in
 substantial part on our net interest income. Our net interest income depends on many factors that are partly or completely outside of our control, including competition, monetary and fiscal policies, and economic conditions generally. Our net
 interest income will be adversely affected if market interest rates change so that the interest we pay on deposits and borrowings increases faster than the interest we earn on loans and investments. An inverted yield curve, such as the one that
 has existed in recent years, places further stress on interest rate risk management. In addition, an increase in interest rates could adversely affect clients' ability to pay the principal or interest on existing loans or reduce their borrowings.
 This may lead to an increase in our non-performing assets, a decrease in loan originations, or a reduction in the value of and income from our loans, any of which could have a material and negative effect on our operations. Fluctuations in market
 rates and other market disruptions are neither predictable nor controllable and may adversely affect our financial condition and earnings.

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 Since 2022, inflationary pressures have affected many aspects of the U.S. economy, including gasoline and fuel prices, and global and domestic supply-chain issues have also had a disruptive effect on many
 industries, including the agricultural industry. In January 2022, due to elevated levels of inflation and corresponding pressure to raise interest rates, the Federal Reserve announced after several periods of historically low federal funds rates
 and yields on Treasury notes that it would be slowing the pace of its bond purchasing and increasing the target range for the federal funds rate over time. The FOMC since has increased the target range 11 times or 525 basis points from March 2022
 to July 2023. As of December 31, 2023, the target range for the federal funds rate had been increased to 5.25% to 5.50%. It remains uncertain whether the FOMC will further increase the target range for the federal funds rate to attain a monetary
 policy sufficiently restrictive to return inflation to more normalized levels, begin to reduce the federal funds rate or leave the rate at its current elevated level for a lengthy period of time. The impact of these developments on the business
 of our clients and on our business cannot be predicted with certainty but could present challenges in 2024 and beyond.

 Beginning in 2021, the U.S. economy began to reflect relatively rapid rates of increase in the consumer price index and other economic indices; a prolonged
 elevated rate of inflation could present risks for the U.S. banking industry and our business. During the latter part of 2021 and into 2023, the U.S. economy exhibited relatively rapid rates of increase in the consumer price index and
 other economic indices. If the U.S. economy encounters a significant, prolonged rate of inflation, this could pose higher relative risks to the banking industry and our business. Such inflationary periods have historically corresponded with
 relatively weaker earnings and higher loan losses for banks.

 In the past, inflationary environments have caused financing conditions to tighten and have increased borrowing costs for some marginal borrowers, which, in turn, has impacted bank credit quality and loan growth.

 Additionally, a sustained period of inflation could prompt broad-based selling of longer-duration, fixed-rate debt, which could have negative implications for equity and real estate markets. Small businesses and
 leveraged loan borrowers can be challenged in a materially higher-rate environment. Higher interest rates can also present challenges for commercial real estate projects, pressuring valuations and loan-to-value ratios.

 In addition, the conflict between Russia and Ukraine and global reactions thereto have increased U.S. domestic and global energy prices. Oil supply disruptions related to the Russia-Ukraine conflict, and sanctions
 and other measures taken by the U.S. or its allies, have led to higher costs for gas, food and goods in the U.S. and exacerbated the inflationary pressures on the economy, with potentially adverse impacts on our customers and on our business,
 results of operations and financial condition.

 We face strong competition from banks, credit unions and other financial services providers that offer banking services, which may limit our ability to attract
 and retain banking clients. Competition in the banking industry generally, and in our geographic market specifically, is strong. Competitors include banks, as well as other financial services providers, such as savings and loan
 institutions, consumer finance companies, brokerage firms, insurance companies, credit unions, mortgage banks and other financial intermediaries. Our competitors include several larger national and regional financial institutions whose greater
 resources may afford them a marketplace advantage inasmuch as they may offer a wider array of banking services at better rates and be able to target a broader client base through more extensive promotional and advertising campaigns. Moreover,
 larger competitors may not be as vulnerable as we are to downturns in the local economy and real estate market since they have a broader geographic area and their loan portfolio is more diversified. While our deposit base has increased, several
 banks have grown their deposit market share in our markets faster than we have resulting in a declining relative deposit market share for us in our existing markets. We believe our declining relative market share in deposits has resulted
 primarily from aggressive marketing and advertising, in-migration of more competitors, expanded delivery channels and more attractive rates offered by larger bank competitors. We also compete against community banks, credit unions and non-bank
 financial services companies that have strong local ties. These smaller institutions are likely to cater to the same small to medium-sized businesses that we target. Additionally, financial technology companies allow clients to obtain loans via
 the Internet in an expeditious manner and have become competitors. If we are unable to attract and retain customers, we may be unable to continue to grow our loan and deposit portfolios and our operations and financial condition may otherwise be
 adversely affected. Ultimately, we may be unable to compete successfully against current and future competitors.

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 Our financial results may be impacted by the cyclicality and seasonality of our agricultural lending business. The Company has provided financing to
 agricultural customers in the mid Central Valley of California throughout its history. We recognize the cyclical nature of the industry, often caused by fluctuating commodity prices, changing climatic conditions and the availability of seasonal
 labor, and manage these risks accordingly. The Company remains committed to providing credit to agricultural customers and will always have a material exposure to this industry. Although the Company's loan portfolio is believed to be well
 diversified, at various times during 2023 a significant portion of the Company's loans (as much as 30.0%) were outstanding to agricultural borrowers. Commitments are well diversified across various commodities, including dairy, grapes, walnuts,
 almonds, cherries, apples, pears, and various row crops. Additionally, many individual borrowers are themselves diversified across commodity types, reducing their exposure, and therefore the Company's, to cyclical downturns in any one commodity.

 The Company's service areas can also be significantly impacted by the seasonal operations of the agricultural industry. As a result, the Company's financial results can be influenced by the banking needs of its
 agricultural customers. Generally speaking, during the spring and summer customers draw down their deposit balances and increase loan borrowings to fund the purchase of equipment and the planting of crops. Deposit balances are replenished and
 loans repaid in late fall and winter as crops are harvested and sold.

 The impact of climate change and governmental and societal responses to climate change, including on the availability of water and the transition to a low-carbon
 economy, could adversely affect our business and our clients' businesses. Despite the fact that 2023 had significant levels of precipitation in California, the State has experienced severe drought conditions at times over the past
 several years. These weather patterns reinforce the fact that the long-term risks associated with the availability of water are significant. The farming belt of the Central Valley is often cited as an example of an area that experienced extreme
 drought. However, not all areas of the state are impacted equally, and this is particularly true in the Central Valley, which stretches some 450 miles from Bakersfield in the south to Redding in the north. The vast majority of the Company's
 agricultural customers are located in the mid Central Valley, an area that benefits from the drainage of the Sacramento, American, Mokelumne and Stanislaus rivers.

 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. All Water Districts must develop plans to comply with the Act, including groundwater recharge programs. Although the exact impact of compliance is not currently known, and
 even prior to 2014 most of the water districts in the Bank's service area had been developing and implementing management plans, it is possible that some water districts will have to ultimately fallow some ground to achieve compliance with the
 Act.

 In recent years, the federal banking agencies have increased their focus on climate-related risks impacting the operations of banks, the communities they serve and the broader financial system. Accordingly, the
 agencies have begun to enhance their supervisory expectations regarding the climate risk management practices of larger banking organizations, including by encouraging such banks to: ensure that management of climate-related risk exposures has
 been incorporated into existing governance structures; evaluate the potential impact of climate-related risks on the bank's financial condition, operations and business objectives as part of its strategic planning process; account for the effects
 of climate change in stress testing scenarios and systemic risk assessments; revise expectations for credit portfolio concentrations based on climate-related factors; consider investments in climate-related initiatives and lending to communities
 disproportionately impacted by the effects of climate change; evaluate the impact of climate change on the bank's borrowers and consider possible changes to underwriting criteria to account for climate-related risks to mortgaged properties;
 incorporate climate-related financial risk into the bank's internal reporting, monitoring and escalation processes; and prepare for the transition risks to the bank associated with the adjustment to a low-carbon economy and related changes in
 laws, regulations, governmental policies, technology, and consumer behavior and expectations.

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 On October 21, 2021, the Financial Stability Oversight Council published a report identifying climate-related financial risks as an "emerging threat" to financial stability. On October 24, 2023, the FDIC, the OCC
 and the Federal Reserve jointly finalized principles for climate-related financial risk management for national banks with more than $100 billion in total assets. Although these risk management principles do not apply to the Bank directly based
 upon our current size, the FDIC has indicated that all banks, regardless of their size, may have material exposures to climate-related financial and other risks that require prudent management. As climate-related supervisory guidance is
 formalized, and relevant risk areas and corresponding control expectations are further refined, we may be required to expend significant capital and incur compliance, operating, maintenance and remediation costs in order to conform to such
 requirements.

 Additional legislation and regulatory requirements and changes in consumer preferences, including those associated with the transition to a low-carbon economy, could increase expenses of, or otherwise adversely
 impact, the Company, its businesses or its customers. We and our customers may face cost increases, asset value reductions, operating process changes, reduced availability of insurance, and the like, as a result of governmental actions or
 societal responses to climate change. New and/or more stringent regulatory requirements relating to climate change or environmental sustainability could materially affect the Company's results of operations by increasing our compliance costs.
 Regulatory changes or market shifts to low-carbon products could also impact the creditworthiness of some of our customers or reduce the value of assets securing loans, which may require the Company to adjust our lending portfolios and business
 strategies.

 Risks Related to Our Growth

 If we are not able to maintain our past levels of growth, our future prospects and competitive position could be diminished and our profitability could be
 reduced. We may not be able to sustain our deposit, loan, and asset growth at the rate we have attained during the past several years. Our growth over the past several years has been driven primarily by agricultural and commercial real
 estate growth in our market areas, growth in non-real estate agricultural and commercial loans, commercial leasing, and residential real estate. A failure to attract and retain high performing employees, heightened competition from other
 financial services providers, and an inability to attract additional core deposits and lending clients, among other factors, could limit our ability to grow as rapidly as we have in the past and as such could have a negative effect on our
 financial condition and operations.

 If we are unable to manage our growth effectively, we may incur higher than anticipated costs, and our ability to execute our growth strategy could be impaired.
 It is our objective to continue to grow our assets and deposits by increasing our product and service offerings and expanding our operations organically. Our ability to manage growth successfully will depend on our ability to (i) identify
 suitable markets for expansion; (ii) attract and retain qualified management; (iii) attract funding to support additional growth; (iv) maintain asset quality and cost controls; (v) maintain adequate regulatory capital and profitability to support
 our lending activities; and (vi) may include finding attractive acquisition targets and successfully acquire and integrate the acquisitions in an efficient manner. If we do not manage our growth effectively, we may be unable to realize the
 benefit from our investments in technology, infrastructure, and personnel that we have made to support our expansion. In addition, we may incur higher costs and realize less revenue growth, which would reduce our earnings and diminish our future
 prospects. Failing to maintain effective financial and operational controls, as we grow, such as appropriate loan underwriting procedures, adequate allowances for credit losses and compliance with regulatory requirements could have a negative
 effect on our financial condition and operations, such as increased credit losses, reduced earnings and potential regulatory restrictions on growth.

 Entering new market areas, new lines of business, or new products and services may subject us to additional risks. A failure to successfully manage these risks
 may have a material adverse effect on our business. As part of our growth strategy, we have implemented and may continue to enter new market areas and new lines of business. We have expanded into the East Bay area of San Francisco and
 Napa, which are relatively new market areas for us. We introduced commercial equipment leasing as a new product line a few years ago. There are risks and uncertainties associated with these efforts, particularly in instances where such product
 lines are not fully mature. In developing and marketing new lines of business and/or new products and services and/or shifting the focus of our asset mix and/or expanding into new markets, we may invest significant time and resources. Initial
 timetables may not be achieved and price and profitability targets may not prove feasible. External factors, such as compliance with regulations, competitive alternatives in these markets and shifting market preferences, may also affect or limit
 their successful implementation. Failure to successfully manage these risks could have an adverse effect on our business, financial condition and results of operations.

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 Risks Related to Our Personnel

 We may have difficulty attracting additional necessary personnel, which may divert resources and limit our ability to successfully expand our operations. Our

 business plan includes, and is dependent upon, our hiring and retaining highly qualified and motivated associates at every level. We have experienced, and expect to continue to experience, substantial competition in identifying, hiring and
 retaining top-quality associates due to low unemployment rate and new financial institutions entering our markets. If we are unable to hire and retain qualified personnel, we may be unable to successfully execute our business strategy and manage
 our growth.

 The unexpected loss of key officers would materially and adversely affect our ability to execute our business strategy, and diminish our future prospects. Our

 success to date and our prospects for success in the future depend substantially on our senior management team. The loss of key members of our senior management team could materially and adversely affect our ability to successfully implement our
 business plan and, as a result, our future prospects. The loss of senior management without qualified successors who can execute our strategy would also have an adverse impact on us.

 As a community bank, our ability to maintain our positive reputation is critical to the success of our business. The failure to maintain that reputation may
 materially and adversely affect our financial performance. Our reputation is one of the most valuable components of our business. As such, we strive to conduct our business in a manner that enhances our reputation. This is done, in
 part, by recruiting, hiring and retaining employees who share our core values of being an integral part of the communities we serve, delivering superior service to our clients. If our reputation is negatively affected by the actions of our
 employees or otherwise, our business and, therefore, our operating results may be materially and adversely affected.

 Risks Related to Our Financial Practices

 Our allowance for credit losses may not be adequate to cover actual losses. A significant source of risk arises from the possibility that we could
 sustain losses due to loan defaults and non-performance on loans. We maintain an allowance for credit losses in accordance with U.S. generally accepted accounting principles to provide for such defaults and other non-performance. The
 determination of the appropriate level of this allowance is an inherently difficult process and is based on numerous assumptions. The amount of future losses is susceptible to changes in economic, operating and other conditions, including changes
 in interest rates, which may be beyond our control. In addition, our underwriting policies, adherence to credit monitoring processes, and risk management systems and controls may not prevent unexpected losses. Our allowance for credit losses may
 not be adequate to cover actual credit losses. Moreover, any increase in our allowance for credit losses will adversely affect our earnings.

 In June 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-13, Measurement of Credit Losses on Financial Instruments ("ASU 2016-13"). ASU 2016-13 became
 effective January 1, 2020, and substantially changed the accounting for credit losses on loans and other financial assets held by banks, financial institutions and other organizations. The standard replaced existing incurred loss impairment
 guidance and established a single allowance framework for financial assets carried at amortized cost. Upon adoption of ASU 2016-13, companies must recognize credit losses on these assets equal to management's estimate of credit losses over the
 full remaining expected life. Companies must consider all relevant information when estimating expected credit losses, including details about past events, current conditions, and reasonable and supportable forecasts. We adopted and fully
 implemented this accounting standard effective January 1, 2022. The adoption of ASU 2016-13 did not have a material negative effect on the level of allowance for credit loss held by us or on our reported earnings. The potential negative effect
 that the adoption of this new accounting pronouncement may have on future lending by us or the banking industry in general is still not well known. We believe that our allowance for credit losses as of December 31, 2023 was adequate to absorb
 expected credit losses inherent in our loan portfolio; however, we cannot assure that such levels will be sufficient to cover actual or future losses.

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 Our financial and accounting estimates and risk management framework rely on analytical forecasting and models, and our risk exposures and losses could be
 significantly greater than our models indicated. The processes we use to estimate our inherent credit losses and to measure the fair value of financial instruments, as well as the processes used to estimate the effects of changing
 interest rates and other market measures on our financial condition and operations, depend upon the use of analytical and forecasting models. Some of our tools and metrics for managing risk are based upon our use of observed historical market
 behavior. We rely on quantitative models to measure risks and to estimate certain financial values. Models may be used in such processes as determining the pricing of various products, grading loans and extending credit, measuring interest rate
 and other market risks, predicting losses, assessing capital adequacy and calculating regulatory capital levels, as well as estimating the value of financial instruments and balance sheet items.

 Poorly designed or implemented models present the risk that our business decisions based on information incorporating such models will be adversely affected due to the inadequacy of that information. Moreover, our
 models may fail to predict future risk exposures if the information used in the model is incorrect, obsolete or not sufficiently comparable to actual events as they occur.

 We seek to incorporate appropriate historical data in our models, but the range of market values and behaviors reflected in any period of historical data is not at all times predictive of future developments in any
 particular period and the period of data we incorporate into our models may prove to be inappropriate for the period being modeled. In such case, our ability to manage risk would be limited and our risk exposure and losses could be significantly
 greater than our models indicated. This could harm our reputation as well as our revenues and profits. Finally, information we provide to our regulators based on poorly designed or implemented models could also be inaccurate or misleading. Some
 of the decisions that our regulators make, including those related to capital distributions to our stockholders, could be affected adversely due to their perception that the quality of the models used to generate the relevant information is
 insufficient.

 Impairment of investment securities could require charges to earnings, which would negatively affect our operations. We maintain a significant amount of
 our assets in investment securities, and must periodically evaluate investment securities for current expected credit losses after the adoption of ASU 2016-13. We evaluate our investment securities portfolio for impairment as of each reporting
 date. At December 31, 2023, we had no investment securities that were impaired.

 Changes in accounting standards could materially affect our financial statements. The Company's consolidated financial statements are presented in
 accordance with accounting principles generally accepted in the United States of America, called GAAP. The financial information contained within our consolidated financial statements is, to a significant extent, financial information that is
 based on approximate measures of the financial effects of transactions and events that have already occurred. A variety of factors could affect the ultimate value that is obtained either when earning income, recognizing an expense, recovering an
 asset or relieving a liability. Other estimates that we use are fair value of our securities and expected useful lives of our depreciable assets. From time to time, the FASB and the SEC change the financial accounting and reporting standards that
 govern the preparation of our financial statements or new interpretations of existing standards emerge. These changes can be difficult to predict and operationally complex to implement and can materially affect how we record and report our
 financial condition and results of operations. In some cases, we could be required to apply a new or revised standard retrospectively, resulting in our restating prior period financial statements.

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 Risks Related to Our Access to Capital

 We may be unable to, or choose not to, pay dividends on our common shares. We have consistently declared an annual cash dividend for over 88 years. Our
 ability to continue to pay dividends depends on various factors. The Company is a legal entity separate and distinct from the Bank, and does not conduct stand-alone operations, which means that the Bank must first pay dividend(s) to the
 Company. The FDIC, the DFPI and California corporate and banking laws may, under certain circumstances, prohibit the Bank's payment of dividends to the Company. Federal Reserve policy requires bank holding companies to pay cash dividends on
 common shares only out of net income available over the past year and only if prospective earnings retention is consistent with the organization's expected future needs and financial condition. The Company's Board of Directors may determine
 that, even though funds are available for dividend payments, retaining the funds for other internal uses, such as expansion of our operations, is necessary or appropriate in light of our business plan and objectives. A failure to pay dividends
 may negatively affect your investment.

 The price of our common shares may fluctuate significantly and our stock may have low trading volumes, which may make it difficult for you to resell common
 shares owned by you at times or prices you find attractive. The stock market and, in particular, the market for financial institution stocks, has experienced significant volatility. The markets may produce downward pressure on stock
 prices for certain issuers without regard to those issuers' underlying financial strength. As a result, the trading volume in our common shares may fluctuate and cause significant price variations to occur. This may make it difficult for you to
 resell common shares owned by you at times or at prices you find attractive.

 The historically low trading volume in our common shares on the OTCQX, under the symbol "FMCB," means that our shares may have less liquidity than other companies, whose shares are more broadly traded. We cannot
 ensure that the volume of trading in our common shares or the price of our common shares will be maintained or will increase in the future. Our stock price can fluctuate significantly in response to a variety of factors discussed in this section,
 including, among other things: actual or anticipated variations in quarterly results of operations; operating and stock price performance of other companies that investors deem comparable to our Company; news reports relating to trends, concerns
 and other issues in the financial services industry; available investment liquidity in our market area since our stock is not listed on any exchange; and perceptions in the marketplace regarding our Company and/or its competitors.

 If we need additional capital in the future to continue our growth, we may not be able to obtain it on terms that are favorable. We may need to raise
 additional capital in the future to support our continued growth and to maintain our capital levels. Our ability to raise capital through the sale of additional securities will depend primarily upon our financial condition and the condition of
 financial markets at that time. Accordingly, we may not be able to obtain additional capital in the amounts or on terms satisfactory to us. Our growth may be constrained if we are unable to generate or raise additional capital as needed.

 Our funding sources may prove insufficient to provide liquidity, replace deposits and support our future growth. We rely on customer deposits, advances
 from the Federal Home Loan Bank of San Francisco ("FHLB"), lines of credit at other financial institutions and the Federal Reserve Bank ("FRB") to fund our operations. Although we have historically been able to replace maturing deposits and
 advances if desired, we may not be able to replace such funds in the future if our financial condition, the financial condition of the FHLB or market conditions were to change. Our financial flexibility will be severely constrained if we are
 unable to maintain our access to funding or if adequate financing is not available to accommodate future growth at acceptable interest rates. Finally, if we are required to rely more heavily on more expensive funding sources to support future
 growth, our revenues may not increase proportionately to cover our costs. In this case, our profitability would be adversely affected. FHLB borrowings and other current sources of liquidity may not be available or, if available, may not be
 sufficient to provide adequate funding for operations. Furthermore, our own actions could result in a loss of adequate funding. For example, our borrowing capacity at the FHLB could be reduced if we are deemed to have poor documentation or
 processes. Accordingly, we may be required to seek additional higher-cost debt in the future to achieve our long-term business objectives. Additional borrowings, if sought, may not be available to us or, if available, may not be available on
 favorable terms. If additional financing sources are unavailable or are not available on reasonable terms, our growth and future prospects could be adversely affected.

 We may be adversely affected by the lack of soundness of other financial institutions or financial market utilities. Financial institutions are
 interrelated because of trading, clearing, counterparty or other relationships. Our ability to engage in routine funding and other transactions could be adversely affected by the actions and commercial soundness of other financial institutions.

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 The high-profile bank failures of Silicon Valley Bank, Signature Bank and First Republic Bank last year, and related negative media attention, also generated significant market trading volatility among
 publicly-traded bank holding companies and, in particular, regional and community banks. These developments negatively impacted customer confidence in the safety and soundness of regional and community banks. The FDIC took steps to ensure that
 depositors of these failed banks would have access to their deposits, including uninsured deposit accounts. U.S. bank regulators have taken action in an effort to further strengthen public confidence in the banking system through the creation of
 a new Bank Term Funding Program. There can be no assurance that these actions will be successful in restoring customer confidence in regional and community banks and the banking system more broadly.

 These events may also result in potentially adverse changes to laws or regulations governing banks and bank holding companies, enhanced regulatory supervision and examination policies and priorities, and/or the
 imposition of restrictions through regulatory supervisory or enforcement activities, including higher capital requirements and/or an increase in the Bank's deposit insurance assessments. Although these legislative and regulatory actions cannot be
 predicted with certainty, any of these potential legislative or regulatory actions could, among other things, subject us to additional costs, limit the types of financial services and products we may offer, and reduce our profitability, any of
 which could materially and adversely affect our business, results of operations or financial condition. Defaults by, or even rumors or questions about, one or more financial institutions or financial market utilities, or the financial services
 industry generally, may lead to market-wide liquidity problems and losses of client, creditor and counterparty confidence and could lead to losses or defaults by us or by other financial institutions.

 Risks Related to Cybersecurity and Information Technology

 Cyber-attacks or other security breaches could have a material adverse effect on our business. In the normal course of business, we collect, process,
 and retain sensitive and confidential information regarding our clients. We also have arrangements in place with other third parties through which we share and receive information about their clients who are or may become our clients. Although we
 devote significant resources and management focus to ensuring the integrity of our systems through information security and business continuity programs, our facilities and systems, and those of third-party service providers, are vulnerable to
 external or internal security breaches, acts of vandalism, computer viruses, misplaced or lost data, programming or human errors or other similar events.

 Information security risks for financial institutions have increased recently in part because of new technologies, the use of the Internet and telecommunications technologies (including mobile devices) to conduct
 financial and other business transactions, and the increased sophistication and activities of organized crime, perpetrators of fraud, hackers, terrorists and others. In addition to cyber-attacks or other security breaches involving the theft of
 sensitive and confidential information, hackers recently have engaged in attacks against large financial institutions, particularly denial of service attacks that are designed to disrupt key business services, such as client-facing websites. We
 are not able to anticipate or implement effective preventive measures against all potential security breaches, because the techniques used change frequently and because attacks can originate from a wide variety of sources. We employ detection and
 response mechanisms designed to contain and mitigate security incidents, but early detection may be thwarted by sophisticated attacks and malware designed to avoid detection.

 We also face risks related to cyber-attacks and other security breaches in connection with credit and debit card transactions that typically involve the transmission of sensitive information regarding our clients
 through various third parties, including merchant acquiring banks, payment processors, payment card networks and our core processors. Some of these parties have in the past been the target of security breaches and cyber-attacks, and because the
 transactions involve third parties and environments such as the point of sale that we do not control or secure, future security breaches or cyber-attacks affecting any of these third parties could impact us through no fault of our own, and in
 some cases we may have exposure and suffer losses for breaches or attacks relating to them. We also rely on numerous other third-party service providers to conduct other aspects of our business operations and face similar risks relating to them.
 While we regularly conduct security assessments on these third parties, we cannot be sure that their information security protocols are sufficient at all times to withstand a cyber-attack or other security breach.

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 The access by unauthorized persons to, or the improper disclosure by us of, confidential information regarding our clients or our own proprietary information, software, methodologies, and business secrets could
 result in significant legal and financial exposure, supervisory liability, damage to our reputation or a loss of confidence in the security of our systems, products and services, which could have a material adverse effect on our financial
 condition or operations. In the past several years, there have been a number of well-publicized attacks or breaches affecting others in our industry that have heightened concern by consumers and have resulted in increased regulatory focus.
 Furthermore, cyber-attacks or other breaches in the future, whether affecting others or us, could intensify consumer concern and regulatory focus and result in reduced use of our cards and increased costs, all of which could have a material
 adverse effect on our business. To the extent we are involved in any future cyber-attacks or other breaches, our brand and reputation could be affected, and this could have a material adverse effect on our financial condition and operations. If
 we experience a cyber-attack, our insurance coverage may not cover all losses, and furthermore, we may experience a loss of reputation.

 We rely on our information technology and telecommunications systems and third-party servicers, and the failure of these systems could adversely affect our
 business. Our business is highly dependent on the successful and uninterrupted functioning of our information technology and telecommunications systems and third-party servicers. We rely on these systems to process new and renewal
 loans, provide client service, facilitate collections and share data across our organization. The failure of these systems, or the termination of a third-party software license or service agreement on which any of these systems is based, could
 interrupt our operations. Because our information technology and telecommunications systems interface with and depend on third-party systems, we could experience service denials if demand for such services exceeds capacity or such third-party
 systems fail or experience interruptions. If sustained or repeated, a system failure or service denial could result in a deterioration of our ability to process new and renewal loans and provide client service or compromise our ability to collect
 loan payments in a timely manner. Our ability to adopt new information technology and technological products needed to meet our clients' banking needs may be limited if our third-party servicers are slow to adopt or choose not to adopt such new
 technology and products. Such a failure to provide this technology and products to our clients could result in a loss of clients, which would negatively affect our financial condition and operations.

 Other Operational Risks

 Our risk management framework may not be effective in mitigating risks and losses to us. Our risk management framework is comprised of various processes,
 systems and strategies, and is designed to manage the types of risk to which we are subject, including, among others, credit, market, liquidity, interest rate and compliance. Our framework also includes financial or other modeling methodologies
 that involve management assumptions and judgment. Our risk management framework may not be effective under all circumstances and may not adequately mitigate any risk of loss to us. If our framework is not effective, we could suffer unexpected
 losses and our financial condition, operations or business prospects could be materially and adversely affected. We may also be subject to potentially adverse regulatory consequences.

 We are subject to certain operating risks, related to client or employee fraud, which could harm our reputation and business. Employee error, or employee
 or client misconduct, could subject us to financial losses or regulatory sanctions and seriously harm our reputation. Misconduct by our employees could include hiding unauthorized activities from us, improper or unauthorized activities on behalf
 of our clients or improper use of confidential information. It is not always possible to prevent employee error and misconduct, and the precautions we take to prevent and detect this activity may not be effective in all cases. Employee error
 could also subject us to financial claims for negligence. If our internal controls fail to prevent or detect an occurrence, or if any resulting loss is not insured, excess insurance coverage is denied or not available, it could have a material
 adverse effect on our financial condition and operations.

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 We depend on the accuracy and completeness of information about clients and counterparties, and our financial condition, operations, financial reporting and
 reputation could be negatively affected if this information is materially misleading, false, inaccurate or fraudulent. In deciding whether to extend credit or enter into other transactions with clients and counterparties, we may rely on
 information furnished to us by or on behalf of clients and counterparties, including financial statements and other financial information. We also may rely on representations of clients and counterparties as to the accuracy and completeness of
 that information and, with respect to financial statements, on reports of independent auditors. In deciding whether to extend credit, we may rely upon our clients' representations that their financial statements conform to U.S. generally accepted
 accounting principles, or GAAP, and present fairly, in all material respects, the financial condition, operations and cash flows of the client. We also may rely on client representations and certifications, or other auditors' reports, with
 respect to the business and financial condition of our clients. Our financial condition, operations, financial reporting and reputation could be negatively affected if we rely on materially misleading, false, inaccurate or fraudulent information
 provided by or about clients and counterparties.

 Catastrophic events including, but not limited to, hurricanes, tornadoes, earthquakes, fires, floods, prolonged drought, and pandemics may adversely affect the
 general economy, financial and capital markets, specific industries, and the Bank. The Bank has significant operations and a significant customer base in regions where natural and other disasters
 may occur. These regions are known for being vulnerable to natural disasters and other risks, such as earthquakes, fires, floods, and prolonged drought. These types of natural catastrophic events at times have disrupted the local economy, the
 Bank's business and clients, and could pose physical risks to the Bank's property. In addition, catastrophic events, such as natural disasters or global pandemics, occurring in other regions of the world may have an impact on the Bank's clients
 and in turn on the Bank. Although we have business continuity and disaster recovery programs in place, a significant catastrophic event could materially adversely affect the Bank's operating results.

 The physical effects of climate change, as well as governmental and societal responses to climate change could materially adversely affect our operations,
 businesses and customers. There is increasing concern over the risks of climate change and related environmental sustainability matters. The physical effects of climate change include rising average global temperatures, rising sea
 levels and an increase in the frequency and severity of extreme weather events and natural disasters, including droughts, wildfires, floods, hurricanes and tornados. Most of the Company's operations and customers are located in California, which
 could be adversely impacted by severe weather events. Agriculture is especially dependent on climate, and climate impacts could include shifting average growing conditions, increased climate and weather variability, decreases in available water
 sources, and more uncertainty in predicting climate and weather conditions, any or all of which could have a particularly adverse impact on our agricultural customers.

 Additional legislation and regulatory requirements and changes in consumer preferences, including those associated with the transition to a low-carbon economy, could increase expenses of, or otherwise adversely
 affect, the Company, its businesses or its customers. Our customers and we may face cost increases, asset value reductions, operating process changes, reduced availability of insurance, and the like, because of governmental actions or societal
 responses to climate change.

 New and/or more stringent regulatory requirements relating to climate change or environmental sustainability could materially affect the Company's results of operations by increasing our compliance costs.
 Regulatory changes or market shifts to low-carbon products could also affect the creditworthiness of some of our customers or reduce the value of assets securing loans, which may require the Company to adjust our lending portfolios and business
 strategies.

 Risks Related to Our Regulatory Environment

 We are subject to regulation, which increases the cost and expense of regulatory compliance, and may restrict our growth and our ability to acquire other
 financial institutions. Supervision, regulation, and examination of the Company and the Bank by the bank regulatory agencies are intended primarily for the protection of consumers, bank clients and the DIF of the FDIC, rather than
 holders of our common shares. As a bank holding company under federal law, we are subject to regulation under the BHCA, and the examination and reporting requirements of the Federal Reserve. In addition to supervising and examining us, the
 Federal Reserve, through its adoption of regulations implementing the BHCA, places certain restrictions on the permissible activities for bank holding companies. Changes in the number or scope of permissible activities could have an adverse
 effect on our ability to realize our strategic goals. As a California state-chartered bank that is not a member of the Federal Reserve System, the Bank is separately subject to regulation by both the FDIC and the DFPI. The FDIC and DFPI regulate
 numerous aspects of the Bank's operations, including adequate capital and financial condition, permissible types and amounts of extensions of credit and investments, permissible non-banking activities and restrictions on dividend payments. We may
 be required to invest significant management attention and resources to evaluate and make any changes necessary to comply with applicable laws and regulations. This allocation of resources, as well as any failure to comply with applicable
 requirements, may negatively affect our operations and financial condition.

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 Banking agencies periodically conduct examinations of our business, including compliance with laws and regulations, and our failure to comply with any regulatory
 actions to which we become subject because such examinations could materially and adversely affect us. The DFPI, the FDIC, and the Federal Reserve periodically conduct examinations of our business, including compliance with laws and
 regulations. Accommodating such examinations may require management to reallocate resources that would otherwise be used in the day-to-day operation of other aspects of our business. If, as a result of an examination, the DFPI or a federal
 banking agency were to determine that the financial condition, capital resources, asset quality, earnings prospects, management, liquidity or other aspects of our operations had become unsatisfactory, or that we or our management were in
 violation of any law or regulation, it may take a number of different remedial actions as it deems appropriate. These actions could include the power to enjoin "unsafe or unsound" practices, to require affirmative actions to correct any
 conditions resulting from any violation or practice, to issue an administrative order that can be judicially enforced, to direct an increase in our capital, to restrict our growth, to assess civil monetary penalties against us, our officers or
 directors, to remove officers and directors and, if it is concluded that such conditions cannot be corrected or there is an imminent risk of loss to clients, to terminate our deposit insurance. FDIC deposit insurance is critical to the continued
 operation of the Bank. If we become subject to such regulatory actions, our business operations could be materially and adversely affected.

 Changes in laws, government regulation and monetary policy may have a material adverse effect on our operations. Financial institutions have been the
 subject of significant legislative and regulatory changes (including the Dodd-Frank Act) and may be the subject of further significant legislation or regulation in the future, none of which is within our control. This may result in repeals of or
 amendments to, existing laws, treaties, regulations, guidance, reporting, recordkeeping requirements, and other government policies. Significant new laws or regulations or changes in, or repeals of, existing laws or regulations, including those
 with respect to federal and state taxation, may cause our results of operations to differ materially. In addition, the costs and burden of compliance could adversely affect our ability to operate profitably. Further, federal monetary policy
 significantly affects the Bank's credit conditions, as well as the Bank's clients, particularly as implemented through the Federal Reserve, primarily through open market operations in U.S. government securities, the discount rate for bank
 borrowings and reserve requirements. A material change in any of these conditions could have a material impact on us, the Bank and the Bank's clients, and therefore on our financial condition and operations.

 New and future rulemaking by the CFPB and other regulators, as well as enforcement of existing consumer protection laws, may have a material effect on our
 operations and operating costs. The CFPB has the authority to implement and enforce a variety of existing federal consumer protection statutes and to issue new regulations. However, with respect to institutions of our size, it does not
 have primary examination and enforcement authority. The authority to examine depository institutions with $10 billion or less in assets, such as the Bank, for compliance with federal consumer laws remains largely with our primary federal
 regulator, the FDIC. However, the CFPB may participate in examinations of smaller institutions on a "sampling basis" and may refer potential enforcement actions against such institutions to their primary regulators. In some cases, regulators such
 as the Federal Trade Commission, or FTC, and the Department of Justice also retain certain rulemaking or enforcement authority, and we remain subject to certain state consumer protection laws. The CFPB has placed significant emphasis on consumer
 complaint management and has established a public consumer complaint database to encourage consumers to file complaints they may have against financial institutions. We are expected to monitor and respond to these complaints, including those that
 we deem frivolous, and doing so may require management to reallocate resources away from more profitable endeavors.

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 The CFPB has adopted a number of significant rules that affect nearly every aspect of the lifecycle of a residential mortgage. These rules implement the Dodd-Frank Act amendments to the Equal Credit Opportunity
 Act, the Truth in Lending Act and the Real Estate Settlement Procedures Act. The rules require banks to, among other things: (i) develop and implement procedures to ensure compliance with a new "reasonable ability to repay" test and identify
 whether a loan meets a new definition for a "qualified mortgage"; (ii) implement new or revised disclosures, policies and procedures for servicing mortgages including, but not limited to, early intervention with delinquent clients and specific
 loss mitigation procedures for loans secured by a client's principal residence; (iii) comply with additional restrictions on mortgage loan originator compensation; and (iv) comply with new disclosure requirements and standards for appraisals and
 escrow accounts maintained for "higher priced mortgage loans." These rules create operational and strategic challenges for us, as we are both a mortgage originator and a servicer.

 We are subject to stringent capital requirements. Pursuant to the Dodd-Frank Act, the federal banking agencies adopted final rules, or the U.S. Basel III
 Capital Rules, to update their general risk-based capital and leverage capital requirements to incorporate agreements reflected in the Third Basel Accord adopted by the Basel Committee on Banking Supervision, or Basel III Capital Standards, as
 well as the requirements of the Dodd-Frank Act. The U.S. Basel III Capital Rules are described in more detail in "Supervision and Regulation — Capital Standards" in this Form 10-K.

 The failure to meet the established capital requirements could result in one or more of our regulators placing limitations or conditions on our activities or restricting the commencement of new activities. Such
 failure could subject us to a variety of enforcement remedies available to the federal regulatory authorities, including limiting our ability to pay dividends, issuing a directive to increase our capital and terminating our FDIC deposit
 insurance. FDIC deposit insurance is critical to the continued operation of the Bank. Our failure to meet applicable regulatory capital requirements, or to maintain appropriate capital levels in general, could affect client and investor
 confidence, our ability to grow, our costs of funds and FDIC insurance costs, our ability to pay dividends on common shares, our ability to make acquisitions, and our operations and financial condition, generally.

 We may be required to contribute capital or assets to the Bank that could otherwise be invested or deployed more profitably elsewhere. Federal law and
 regulatory policy impose a number of obligations on bank holding companies designed to reduce potential loss exposure to the clients of insured depository subsidiaries and to the FDIC's DIF. For example, a bank holding company is required to
 serve as a source of financial strength to its FDIC-insured depository subsidiaries and to commit financial resources to support such institutions where it might not do so otherwise. These situations include guaranteeing the compliance of an
 "undercapitalized" bank with its obligations under a capital restoration plan.

 A capital injection into the Bank may be required at times when we do not have the resources to provide it at the holding company level; therefore, we may be required to issue common shares or debt to obtain the
 required capital. Issuing additional common shares would dilute our current stockholders' percentage of ownership and could cause the price of our common shares to decline. Any debt would be entitled to a priority of payment over the claims of
 the Company's general unsecured creditors or equity holders. Thus, any Company borrowing to make the required capital injection may be expensive and adversely affect our cash flows, financial condition, operations, and business prospects.

 We face a risk of non-compliance and enforcement actions with respect to the Bank Secrecy Act ("BSA") and other anti-money laundering statutes and regulations. Like

 all U.S. financial institutions, we are subject to monitoring requirements under federal law, including anti-money laundering, or AML, and BSA matters. Since September 11, 2001, banking regulators have intensified their focus on AML and BSA
 compliance requirements, particularly the AML provisions of the USA PATRIOT Act. There is also increased scrutiny of compliance with the rules enforced by the U.S. Treasury Department's OFAC, which involve sanctions for dealing with certain
 persons or countries. While the Bank has adopted policies, procedures and controls to comply with the BSA, other AML statutes and regulations and OFAC regulations, this aggressive supervision and examination and increased likelihood of
 enforcement actions may increase our operating costs, which could negatively affect our operations and reputation.

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 We are subject to federal and state fair lending laws, and failure to comply with these laws could lead to material penalties. Federal and state fair
 lending laws and regulations, such as the Equal Credit Opportunity Act and the Fair Housing Act, impose non-discrimination lending requirements on financial institutions. The FDIC, the Department of Justice, the CFPB and other federal and state
 agencies are responsible for enforcing these laws and regulations. Private parties may also have the ability to challenge an institution's performance under fair lending laws in private class action litigation. A successful challenge to our
 performance under the fair lending laws and regulations could adversely impact our rating under the CRA, and result in a wide variety of sanctions, including the required payment of damages and civil money penalties, injunctive relief, imposition
 of restrictions on merger and acquisition activity and restrictions on expansion activity, which could negatively impact our reputation, financial condition and operations.

 Regulations relating to privacy, information security and data protection could increase our costs, affect or limit how we collect and use personal information
 and adversely affect our business opportunities. We are subject to various privacy, information security and data protection laws, including requirements concerning security breach notification, and these laws could negatively affect
 us. Federal law imposes requirements for the safeguarding of certain client information. Various state and federal banking regulators and states have also enacted data security breach notification requirements with varying levels of individual,
 consumer, regulatory or law enforcement notification in certain circumstances in the event of a security breach. Moreover, legislators and regulators in the United States are increasingly adopting or revising privacy, information security and
 data protection laws that potentially could have a significant impact on our current and planned privacy, data protection and information security-related practices, our collection, use, sharing, retention and safeguarding of consumer or employee
 information, and some of our current or planned business activities. This could also increase our costs of compliance and business operations and could reduce income from certain business initiatives.

 Compliance with current or future privacy, data protection and information security laws (including those regarding security breach notification) affecting client or employee data to which we are subject could
 result in higher compliance and technology costs and could restrict our ability to provide certain products and services, which could have a material adverse effect on our financial conditions or operations.

 Our failure to comply with privacy, data protection and information security laws could result in potentially significant regulatory or governmental investigations or actions, litigation, fines, sanctions and
 damage to our reputation, which could have a material adverse effect on our financial condition or operations.

 Possible changes in the U.S. tax laws could adversely affect our business and result of operations in a variety of ways. We are subject to changes in tax
 law that could increase our effective tax rates. These law changes may be retroactive to previous periods and as a result could negatively affect our current and future financial performance. In particular, the Tax Cuts and Jobs Act, which was
 signed into law in December 2017, includes a number of provisions impacting the banking industry and the borrowers and the market for residential and commercial real estate. Changes include a lower limit on the deductibility of interest on
 residential mortgage loans and home equity loans; a limitation on the deductibility of business interest expense; and a limitation on the deductibility of property taxes and state and local income taxes. The law's limitation on the mortgage
 interest deduction and state and local tax deduction for individual taxpayers has increased the after-tax cost of owning a home for many of our existing clients. The Inflation Reduction Act, which was signed into law in the United States in
 August 2022, among other things, imposes a surcharge on stock repurchases. The value of the properties securing loans in our loan portfolio may be adversely impacted as a result of the changing economics of home ownership, which could require an
 increase in our provision for loan losses, which would reduce our profitability and could materially adversely affect our business, financial condition and results of operations. Further, these changes implemented by these tax laws could make
 some businesses and industries less inclined to borrow, potentially reducing demand for our commercial loan products.

 Item 1B.

 Unresolved Staff Comments

 None.

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 Item 1C.

 Cybersecurity

 The federal banking regulators regularly issue new guidance and standards, and update existing guidance and standards, regarding cybersecurity intended to enhance cyber risk management among financial institutions.
 Financial institutions are expected to comply with such guidance and standards and to accordingly develop appropriate security controls and risk management processes. If we fail to observe such regulatory guidance or standards, we could be
 subject to various regulatory sanctions, including financial penalties. In 2023, the SEC issued a final rule that requires disclosure of material cybersecurity incidents, as well as cybersecurity risk management, strategy and governance. Under
 this rule, banking organizations that are SEC registrants must generally disclose information about a material cybersecurity incident within four business days of determining it is material with periodic updates as to the status of the incident
 in subsequent filings as necessary.

 Under a final rule adopted by federal banking agencies in 2021, banking organizations are required to notify their primary banking regulator within 36 hours of determining that a "computer-security incident" has
 materially disrupted or degraded, or is reasonably likely to materially disrupt or degrade, the banking organization's ability to carry out banking operations or deliver banking products and services to a material portion of its customer base,
 its businesses and operations that would result in material loss, or its operations that would impact the stability of the United States. The federal banking agencies have also adopted guidelines for establishing information security standards
 and cybersecurity programs for implementing safeguards under the supervision of the Board of Directors. These guidelines, along with related regulatory materials, increasingly focus on risk management and processes related to information
 technology and the use of third parties in the provision of financial services. Moreover, recent cyberattacks against banks and other financial institutions that resulted in unauthorized access to confidential customer

 information have prompted the federal banking regulators to issue more extensive guidance on cybersecurity risk management. Among other things, financial institutions are expected to design multiple layers of
 security controls to establish lines of defense and ensure that their risk management processes address the risks posed by compromised customer credentials, including security measures to authenticate customers accessing internet-based services.
 A financial institution also should have a robust business continuity program to recover from a cyberattack and procedures for monitoring the security of third-party service providers that may have access to nonpublic data at the institution.

 State regulators have also been increasingly active in implementing privacy and cybersecurity standards and regulations. Recently, several states have adopted regulations requiring certain financial institutions to
 implement cybersecurity programs and many states, have also recently implemented or modified their data breach notification, information security and data privacy requirements. We expect this trend of state-level activity in those areas to
 continue and are continually monitoring developments in the states in which our customers are located.

 Risks and exposures related to cybersecurity attacks, including litigation and enforcement risks, are expected to be elevated for the foreseeable future due to the rapidly evolving nature and sophistication of
 these threats, as well as due to the expanding use of Internet banking, mobile banking and other technology-based products and services by us and our customers.

 See Item 1A. "Risk Factors" for a further discussion of risks related to cybersecurity.

 Risk Management and Strategy

 Information security and cybersecurity risk is the risk that the security, confidentiality, integrity or availability of our information and critical information systems are impacted by unauthorized
 or unintended access, use, disclosure, disruption, modification or destruction. Cybersecurity attacks and other security breaches can have material adverse impacts on our business. While no organization can eliminate cybersecurity risk entirely,
 we devote significant resources to our security program that we believe is reasonably designed to mitigate our cybersecurity and information technology risk. The Bank devotes significant resources and management focus to ensuring the integrity of
 our systems through information security and business continuity programs. However, our facilities and systems, and those of third-party service providers, are still vulnerable to external or internal security breaches, acts of vandalism,
 computer viruses, misplaced or lost data, programming or human errors, or other similar events. The Company seeks to address cybersecurity risks through the implementation of a governance structure and processes to assess, identify, manage,
 remediate, and report cybersecurity risks.

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 Identifying and assessing cybersecurity risks is integrated into our overall risk management program and processes. Cybersecurity risks related to our business, technical operations, data, and
 privacy, along with cybersecurity risk-related compliance issues, are identified and addressed through a framework consisting of third-party assessments, internal information technology audits, information security assessments, and risk and
 compliance reviews. We conduct regular privacy and cybersecurity reviews of systems, audit applicable data and information policies, perform penetration and vulnerability testing using third-party tools to test security controls, perform regular
 training and assessments for the Board of Directors and employees, monitor emerging data privacy and information security laws and regulations, and implement applicable changes to improve our overall security posture. We regularly engage
 third-party auditors to assess our cybersecurity program and compliance with all applicable "best practices" and regulations. The Company adjusts its information security policies, standards, processes and practices as necessary based on the
 information provided by these assessments and to remediate material identified vulnerabilities.

 We have in place a robust incident response process that helps ensure our preparedness for a cybersecurity incident including our ability to detect, analyze, contain, remediate, and recover from a
 security incident as well as conduct post-incident analysis to avoid future incidents. Incident response process activities are overseen by cross-functional leadership in Risk Management, Operations, Information Security, Compliance, and
 Information Systems. Security events and incidents are evaluated, ranked by severity, and prioritized for response and remediation. Incidents are evaluated to determine materiality and operational, business, and overall privacy impacts. We
 conduct regular exercises and drills to simulate responses to various cybersecurity incidents. The incident response team, including management, coordinates with technical and business stakeholders to further analyze risks and enhance detection,
 mitigation, and remediation strategies incorporated in the incident response program.

 Our risk management program regularly assesses third-party risks (inclusive of fourth-party risk) by conducting activities to identify and mitigate risks from third-parties (e.g.,
 vendors, suppliers, and other business partners). Cybersecurity risks are evaluated when selecting and managing applicable third-parties that handle or process employee, business, or customer data, and a
 review process that includes due diligence over a third-party's information security and technology control environment is conducted at onboarding and periodically throughout the lifecycle of the relationship to ensure that systems of third-
 parties meet certain security baseline requirements. We maintain procedures to respond to, manage and mitigate third-party cybersecurity events and vulnerabilities when identified.

 Cybersecurity Gover nance

 Given the importance of information security, privacy and data protection to our stakeholders, cybersecurity is a critical part of our risk management program and a key focus area for our Board and
 Executive Management. The Board of Directors oversees management's processes for identifying and mitigating risks, including cybersecurity risks, to help manage our risk exposure to meet our strategic objectives. Executive Management and our
 Information Security Officer ("ISO") regularly brief the Board of Directors on our cybersecurity and information security posture and ensure the Board is apprised of emerging risks and cybersecurity incidents deemed to have a direct or indirect
 business impact.

 The Audit & Risk Committee meets on a monthly basis to receive updates from management, including leaders from Information Systems, Information Security, Risk Management, and Compliance, on
 matters of cybersecurity risks and mitigation initiatives. The leaders from these areas each bring over 20 years of professional experience and certifications in information technology, information security, information systems audit,
 compliance, and risk management. This group of leaders provides updates on existing and new cybersecurity risks, status updates on how management is addressing or mitigating cyber risks and cybersecurity or privacy incidents, and progress on key
 cybersecurity initiatives.

 Table

 The Electronic Data Processing ("EDP") Steering Committee is a senior management level committee that meets at least quarterly to discuss a variety of information technology and cybersecurity
 matters, which form the basis for providing status reports to the Board of Directors. The committee is responsible for monitoring all Information Systems-related projects and initiatives, facilitating the remediation of issues that could
 adversely impact the ability of the Information Systems Department to perform its function, and allocating available resources to the highest priority projects and initiatives. The Chief Administrative Officer chairs the EDP Steering Committee
 and members of Executive Management, Information Systems, Information Security, Treasury Management, Retail and Wholesale Banking departments are represented in the meetings. In addition to project management guidance, the committee provides
 oversight of and direction for the Information Security Program, monitors cybersecurity risks, and helps ensure prompt remediation of cybersecurity incidents.

 In 2023, we did not identify any cybersecurity incidents that have materially affected or are reasonably likely to materially affect our business strategy, results of operations, or financial
 condition; however, cybersecurity threats are pervasive. Despite the capabilities, processes and security measures we employ that we believe are designed to detect, reduce, and mitigate the risk of cybersecurity incidents, we may not be aware of
 all vulnerabilities or might not accurately assess the risks of incidents, and such preventative measures cannot provide absolute security and may not be sufficient in all circumstances or mitigate all potential risks. Moreover, cybersecurity
 threats are continuously evolving, which may cause cybersecurity threats to be more difficult to detect in the future. See "Risk Factors - Risks Related to Cybersecurity and Information Technology" in Part I, Item 1A of this Form 10-K, for
 additional information about these and other risks related to cybersecurity and information technology.

 Item 2.

 Properties

 Farmers & Merchants Bancorp and its subsidiaries are headquartered in Lodi, California. Executive offices are located at 111 W. Pine Street. We own our headquarters, loan servicing center, administrative
 offices, warehouses and parking lots along with land for future banking locations. Banking services are provided in 29 branch locations in the Company's service area. Of the 29 branches, 20 are owned and 9 are leased. The expiration of these
 leases occurs between the years 2024 and 2030, however most of these leases have extension options that typically range from 5 to 10 years. See Note 13, located in Item 8. "Financial Statements and Supplementary Data" in this Form 10-K.

 Item 3.

 Legal Proceedings

 Certain lawsuits and claims arising in the ordinary course of business have been filed or are pending against the Company or its subsidiaries. Based upon information available to the Company, its review of such
 lawsuits and claims and consultation with its counsel, the Company believes the liability relating to these actions, if any, would not have a material adverse effect on its consolidated financial statements.

 There are no material proceedings adverse to the Company to which any director, officer or affiliate of the Company is a party.

 Item 4.

 Mine Safety Disclosures

 Not Applicable

 Table

 Item 5.

 Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

 The common stock of Farmers & Merchants Bancorp is not widely held or listed on any exchange. However, trades are reported on the OTCQX under the symbol "FMCB."

 The following tables summarize the actual high, low, and close sale prices for the Company's common stock since the first quarter of 2022. These figures are based on activity posted on the OTCQX:

 Year Ended December 31, 2023

 High

 Low

 Close

 Dividend

 Declared

 First quarter

 $

 1,088

 $

 $

 1,015

 $

 -

 Second quarter

 1,020

 8.30

 Third quarter

 1,000

 -

 Fourth quarter

 1,058

 1,058

 8.80

 Year Ended December 31, 2022

 High

 Low

 Close

 Dividend

 Declared

 First quarter

 $

 $

 $

 $

 -

 Second quarter

 7.85

 Third quarter

 -

 Fourth quarter

 1,088

 1,050

 8.30

 As of February 29, 2024, there were approximately 1,280 stockholders of record of the Company's common stock. The Company and, before the Company was formed, the Bank, has paid cash dividends for the past 88
 consecutive years. There are limitations under Delaware corporate law as to the amounts of cash dividends that may be paid by the Company. Additionally, if we decided to defer interest on our 2003 subordinated debentures, we would be prohibited
 from paying cash dividends on the Company's common stock. The Company is dependent on cash dividends paid by the Bank to fund its cash dividend payments to its stockholders. There are regulatory limitations on cash dividends that may be paid by
 the Bank. See "Item 1. Business – Supervision and Regulation."

 On November 8, 2022, the Board of Directors authorized an extension to its share repurchase program through December 31, 2024 for an additional $20.0 million of the Company's common stock ("Repurchase Plan"), which
 represented approximately 4% of outstanding shareholders' equity at the time of approval. Repurchases by the Company under the Repurchase Plan may be made from time to time through open market purchases, trading plans established in accordance
 with SEC rules, privately negotiated transactions, or by other means. On November 14, 2023, the Board of Directors authorized a further extension to its share repurchase program through December 31, 2024 for an additional $25.0 million of the
 Company's common stock, which represented approximately 4% of outstanding shareholders' equity as of December 31, 2023.

 During 2023, the Company repurchased 20,366 shares under the Repurchase Plan, for a total of $20.2 million under the combined $20.0 million share repurchase program authorized in November 2022 and the additional
 $25.0 million share repurchase program authorized in November 2023. All of these shares were purchased at prices ranging from $942.00 to $1,083.00 per share, based upon the then current price on the OTCQX. The Company did not issue any shares of
 common stock during 2023. As of December 31, 2023, there remains $24.5 million authorized for repurchases under the Repurchase Plan.

 The actual means and timing of any repurchases, the quantity of purchased shares and prices will be subject to certain limitations, including, without limitation, market prices of the Company's common shares, general market and economic
 conditions, the Company's financial performance, capital position, and applicable legal and regulatory requirements, and at the discretion of the Chief Executive Officer and Chief Financial Officer.

 Table

 Repurchases under the Repurchase Plan may be initiated, discontinued, suspended, or restarted at any time in the Company's discretion. The Company is not obligated to repurchase any shares under the Repurchase
 Plan. No shares may be repurchased pursuant to the authority granted in the Repurchase Plan after December 31, 2024. Repurchased shares are to be used to fund the Company's non-qualified retirement plans or may be returned to the status of
 authorized but unissued common shares of the Company.

 The following table reports information regarding repurchases of our common stock during the year ended December 31, 2023:

 Period

 Total number

 of shares

 purchased

 Average price

 paid per share (2)

 Total number of shares

 purchased as part of

 publicly announced

 plans or programs

 Maximum number (or

 approximate dollar

 value) of shares that

 may yet purchased

 under the plans or

 programs (In

 thousands) (1)

 October 1, 2023 to October 31, 2023

 $

 974.85

 $

 2,564

 November 1, 2023 to November 30, 2023

 1,144

 952.89

 1,144

 26,474

 December 1, 2023 to December 31, 2023

 1,980

 978.46

 1,980

 24,536

 Total 4th Quarter 2023

 4,042

 $

 970.40

 4,042

 $

 24,536

 Total 2023

 20,366

 $

 989.57

 20,366

 $

 24,536

 (1) As of November 8, 2022, the Board approved an extension of the repurchase program through December 31, 2024,
 for an additional $20 million of the Company's common stock. As of November 14, 2023, the Board approved a further extension to the repurchase program through December 31, 2024 for an additional $25 million of the Company's common stock.

 (2) The aggregate purchase price and weighted average price per share does not include the effect of excise tax
 expense incurred on net stock repurchases. For the year ended December 31, 2023, the excise tax expense accrual totaled $202,000.

 Shareholder Rights Plan

 On August 5, 2008, the Board of Directors approved a Share Purchase Rights Plan (the "Rights Plan"), pursuant to which the Company entered into a Rights Agreement dated August 5, 2008, with Computershare as Rights
 Agent, and the Company declared a dividend of a right to acquire one preferred share purchase right (a "Right") for each outstanding share of the Company's common stock, $0.01 par value per share, to stockholders of record at the close of
 business on August 15, 2008. Generally, the Rights are only triggered and become exercisable if a person or group (the "Acquiring Person") acquires beneficial ownership of 10 percent or more of the Company's common stock or announces a tender
 offer for 10 percent or more of the Company's common stock.

 The Rights Plan is similar to plans adopted by many other publicly traded companies. The effect of the Rights Plan is to discourage any potential acquirer from triggering the Rights without first convincing the
 Company's Board of Directors that the proposed acquisition is fair to, and in the best interest of, all of the stockholders of the Company. The provisions of the Plan, if triggered by the Acquiring Person, will substantially dilute the equity and
 voting interest of any potential acquirer unless the Board of Directors approves of the proposed acquisition (under Article XV of the Company's Certificate of Incorporation, the Board of Directors has the authority to consider any and all factors
 in determining whether an acquisition is in the best interests of the Company and its stockholders). Each Right, if and when exercisable, will entitle the registered holder to purchase from the Company one one-hundredth of a share of Series A
 Junior Participating Preferred Stock, no par value, at a purchase price of $1,600 for each one one-hundredth of a share, subject to adjustment.

 Each holder of a Right (except for the Acquiring Person, whose Rights will be null and void upon such event) shall thereafter have the right to receive, upon exercise, that number of Common Shares of the Company
 having a market value of two times the exercise price of the Right. At any time before a person becomes an Acquiring Person, the Rights can be redeemed, in whole, but not in part, by the Company's Board of Directors at a price of $0.001 per
 Right.

 Table

 The Rights Plan was set to expire on August 5, 2018. On November 19, 2015, the Board of Directors approved a seven-year extension of the term of the Rights Plan. Pursuant to an Amendment to the Rights Agreement
 dated February 18, 2016, the term of the Rights Plan was extended from August 5, 2018 to August 5, 2025. The extension of the term of the Rights Plan was intended as a means to continue to guard against abusive takeover tactics and was not in
 response to any particular proposal. The Board also increased the purchase price under the Rights Plan to $1,600 per one one-hundredth of a preferred share from $1,200, to reflect the increase in the market price of the Company's common stock
 over the past several years.

 Table

 Performance Graph

 The following graph compares the Company's cumulative total stockholder return on common stock from December 31, 2018 to December 31, 2023 to that of: (i) the S&P 600 Regional Banks (Sub Ind) (TR) Index; and
 (ii) the cumulative total return of the New York Stock Exchange AMEX Composite market index. The graph assumes an initial investment of $100 on December 31, 2018 and reinvestment of dividends. The stock price performance set forth in the
 following graph is not necessarily indicative of future price performance. The Company's stock price data is based on activity posted on the OTCQX and on private transactions between individual stockholders that are reported to the Company. This data was furnished by Zacks SEC Compliance Services Group.

 This graph shall not be deemed filed or incorporated by reference into any filing under the Securities Act.

 Table

 Item 6.

 Reserved

 Item 7.

 Management's Discussion and Analysis of Financial Condition and Results of Operations

 The following discussion is intended to provide a comprehensive review of the Company's operating results and financial condition. The information contained in this section should be read in conjunction with the
 Audited Consolidated Financial Statements and accompanying Notes to Consolidated Financial Statements in this Form 10-K. Information related to the comparison of the results of operations for the years December 31, 2022 to 2021 is found in
 "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the 2022 Annual Report on Form 10-K filed with the SEC on March 15, 2023.

 Overview

 Farmers & Merchants Bancorp (the "Company" or "FMCB") is a Delaware registered bank holding company organized in 1999. As a registered bank holding company, FMCB is subject to regulation, supervision, and
 examination by the Federal Reserve and by the California Department of Financial Protection and Innovation ("DFPI"). The Company's principal business is to serve as a holding company for Farmers & Merchants Bank of Central California (the
 "Bank" or "F&M Bank") and for other banking or banking related subsidiaries, which the Company may establish or acquire. Over 107 years ago, August 1, 1916, marked the first day of business for Farmers & Merchants Bank (the "Bank"). The
 Bank was incorporated under the laws of the State of California and licensed as a state-chartered bank. The Bank's first venture out of Lodi occurred when the Galt office opened in 1948. Since then the Bank has opened full-service branches in
 Linden, Manteca, Riverbank, Modesto, Sacramento, Elk Grove, Turlock, Hilmar, Stockton, Merced, Walnut Creek, Concord, Walnut Grove, Oakland and Napa. As a legal entity separate and distinct from its subsidiary, the Company's principal source of
 funds is, and will continue to be, dividends paid by and other funds received from the Bank. Legal limitations are imposed on the amount of dividends that may be paid and loans that may be made by the Bank to the Company.

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

 The Company's outstanding common stock as of December 31, 2023, consisted of 747,971 shares of common stock, $0.01 par value. No shares of preferred stock were issued or outstanding as of December 31, 2023. The
 common stock of the Company is not widely held or listed on any exchange. However, trades are reported on the OTCQX under the symbol "FMCB."

 The primary source of funding for the Company's growth has been the generation of core deposits, which the Company raises through its existing branch locations, newly opened branch locations, or through
 acquisitions. Loan growth over the years is the result of organic growth generated by the Company's seasoned relationship managers and supporting associates who provide outstanding service and responsiveness to the Company's clients.

 The Company's results of operations are largely dependent on net interest income. Net interest income is the difference between interest income earned on interest earning assets, which are comprised of loans and
 leases, investment securities, short-term investments and interest bearing deposits at other banks, and the interest the Company pays on interest bearing liabilities, which are primarily deposits, and, to a lesser extent, other borrowings.
 Management strives to match the re-pricing characteristics of the interest earning assets and interest bearing liabilities to protect net interest income from changes in market interest rates and changes in the shape of the yield curve.

 Table

 The Company measures its performance by calculating the net interest margin, return on average assets, return on average equity and the efficiency ratio. Net interest margin is calculated by dividing net interest
 income, which is the difference between interest income on interest earning assets and interest expense on interest bearing liabilities, by average interest earning assets. Net interest income is the Company's largest source of revenue. Interest
 rate fluctuations, as well as changes in the amount and type of earning assets and liabilities, combine to affect net interest income. The return on average assets is calculated by dividing the Company's net income by its total average assets and
 the return on average equity is calculated by dividing the Company's net income by its shareholder equity. The efficiency ratio is calculated by dividing non-interest expense by the sum of net interest income and non-interest income.

 Selected Financial Data

 The following condensed consolidated statements of financial condition and operations and selected performance ratios as of December 31, 2023, 2022, and 2021 and for the years then ended have been derived from our
 audited consolidated financial statements. The information below is qualified in its entirety by the detailed information included elsewhere herein and should be read along with this "Item 7. Management's Discussion and Analysis of Financial
 Condition and Results of Operations" and "Item 8, Financial Statement and Supplementary Data."

 Years Ended December 31

 (Dollars in thousands, except per share data)

 2023

 2022

 2021

 Selected Income Statement Information:

 Interest income

 $

 253,754

 $

 198,413

 $

 165,268

 Interest expense

 4,840

 4,332

 160,936

 9,407

 6,450

 1,910

 Net interest income after provision for credit losses

 205,978

 187,123

 159,026

 Non-interest income

 6,178

 21,056

 Non-interest expense

 91,761

 Income before income tax expense

 116,553

 99,741

 88,321

 Income tax expense

 21,985

 $

 $

 $

 Selected financial ratios:

 Basic and diluted earnings per share

 $

 116.61

 $

 96.55

 $

 84.01

 Cash dividends per common share

 17.10

 16.15

 15.30

 Dividend payout ratio

 14.66

 %

 16.73

 %

 18.21

 %

 Net interest margin (tax equivalent)

 4.30

 %

 3.81

 %

 3.46

 %

 Non-interest income to average assets

 0.28

 %

 0.12

 %

 0.43

 %

 Non-interest expense to average assets

 1.98

 %

 1.75

 %

 1.87

 %

 Efficiency ratio

 45.31

 %

 46.84

 %

 50.42

 %

 Return on average assets

 1.68

 %

 1.41

 %

 1.35

 %

 Return on average equity

 17.05

 %

 16.04

 %

 15.00

 %

 Net charge-offs (recoveries) to average loans

 (0.01

 %)

 0.01

 %

 (0.01

 %)

 Table

 (Dollars in thousands, except per share data)

 2023

 2022

 2021

 Selected Balance Sheet Information:

 Cash and cash equivalents

 $

 $

 $

 715,460

 Investment securities

 999,750

 997,817

 1,007,506

 Gross loans held for investment

 3,521,718

 3,247,911

 Total assets

 5,308,928

 5,327,399

 5,177,720

 4,668,095

 4,759,269

 4,640,152

 Shareholders' equity

 463,136

 Average Balances:

 Average earning assets

 5,027,990

 5,091,684

 4,656,337

 Average assets

 5,270,352

 5,341,901

 4,913,999

 Average shareholders' equity

 518,035

 468,001

 442,246

 Selected financial ratios:

 Book value per share

 $

 735.00

 $

 631.63

 $

 586.51

 Tangible book value per share

 $

 717.05

 $

 613.42

 $

 568.04

 Allowance for credit losses to total loans

 2.05

 %

 1.90

 %

 1.88

 %

 Non-performing assets to total assets

 0.02

 %

 0.03

 %

 0.03

 %

 Loans held for investment to deposits

 78.52

 %

 74.00

 %

 70.00

 %

 Capital ratios:

 Common equity tier 1 capital to risk-weighted assets

 12.30

 %

 11.57

 %

 11.68

 %

 12.53

 %

 11.80

 %

 11.94

 %

 13.78

 %

 13.06

 %

 13.19

 %

 10.38

 %

 9.36

 %

 8.92

 %

 Tangible common equity ratio(1)

 10.13

 %

 8.87

 %

 8.69

 %

 (1) See "Non-GAAP Measurements"

 Summary of Critical Accounting Policies and Estimates

 In the opinion of management, the accompanying Consolidated Statements of Financial Condition and related Consolidated Statements of Income, Comprehensive Income, Changes in Shareholders' Equity and Cash Flows
 reflect all adjustments (which include reclassification and normal recurring adjustments) that are necessary for a fair presentation in conformity with GAAP. The preparation of financial statements in conformity with GAAP requires management to
 make estimates and assumptions that affect amounts reported in the financial statements.

 Various elements of our accounting policies, by their nature, are inherently subject to estimation techniques, valuation assumptions and other subjective assessments. In particular, management has identified
 certain accounting policies that, due to the judgments, estimates and assumptions inherent in those policies, are critical to an understanding of our financial statements. Management believes the judgments, estimates and assumptions used in the
 preparation of the financial statements are appropriate based on the factual circumstances at the time. However, given the sensitivity of the financial statements to these critical accounting policies, the use of other judgments, estimates and
 assumptions could result in material differences in our results of operations or financial condition. Further, subsequent changes in economic or market conditions could have a material impact on these estimates and our financial condition and
 operating results in future periods. For additional information concerning critical accounting policies, see Note 1 located in Item 8: "Financial Statements and Supplementary Data" in this Form 10-K and the following:

 Use of Estimates — The preparation of our financial statements requires management to make estimates and judgments that affect the reported amount of
 assets, liabilities, revenues and expenses. On an ongoing basis, management evaluates the estimates used. Estimates are based upon historical experience, current economic conditions and other factors that management considers reasonable under the
 circumstances and the actual results may differ from these estimates under different assumptions. The allowance for credit losses, deferred income taxes, and fair values of financial instruments are estimates, which are particularly subject to
 change.

 Table

 Allowance for Credit Losses — The Company recognizes there is risk of credit losses with financial instruments, such as loans and unfunded loan
 commitments, where the Company advances funds to a counterparty. The risk of credit losses varies with, among other things, the type of financial instrument, the creditworthiness and cash flows of the counterparty, any guarantees from government
 agencies, and the collateral, if any, used to secure the financial instrument. The Company maintains an allowance for credit losses on loans and unfunded commitments held in accordance with GAAP. The allowance for credit losses represents our
 estimate of current expected credit losses inherent in our existing loan portfolio. The allowance for credit losses is increased by charging a provision for credit losses against income and reduced by charge-offs, net of recoveries.

 Under the guidance of Financial Accounting Standards Board Accounting Standards Update 2016-13, Financial Instruments – Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments ("CECL"), we
 evaluate our allowance for credit losses quarterly based on a number of quantitative and qualitative factors. Allowance for credit losses is provided on both a specific and general basis. Specific allowances are provided for impaired credits for
 which the expected/anticipated loss is measurable. General valuation allowances are based on a portfolio segmentation based on risk grading, with a further evaluation of various quantitative and qualitative factors.

 The Company uses the Weighted Average Remaining Maturity ("WARM") method to calculate the ACL, as this method is deemed the most appropriate given the Company's current size and complexity. The Company begins its
 determination of credit losses by evaluating historical credit loss experience by loan segment. The Company analyzes historical credit loss criteria over a fifteen-year history for both the Company's loss history and its peers. Due to a growth
 cycle that has expanded the Company's geographical service area and product mix as it has expanded into the San Francisco Bay Area, the Company's peer group losses have been determined to better align with the Company's loss profile in loans
 related to commercial, industrial, and personal segments. However, given the low concentration in agricultural industry related loans in the peer group, the Company's own loss history in agricultural loans is more suitable. These loss factors are
 analyzed in conjunction with weighted average duration calculations in order to assess the loss factors over the life of the loan segment.

 Historical loss information may be adjusted based on specific risk characteristics by loan segment. Such risk characteristics may include, but are not necessarily limited to, changes in lending policies and
 procedures, including changes in underwriting standards and collection, charge-off, and recovery practices not considered elsewhere in estimating credit losses; changes in national and local economic conditions and forecasts; changes in the
 nature and volume of the loans and in the terms of such instruments; changes in the experience, ability, and depth of lending management and other relevant staff; changes in the volume and severity of past due status, the volume of non-accrual
 loans, and the volume and severity of adversely classified or graded loans; changes in the quality of the institution's loan review system; changes in the value of underlying collateral for collateral-dependent loans; the existence and effect of
 any concentrations of credit, and changes in the level of such concentrations; and the effect of other external factors such as competition and legal and regulatory requirements on the level of estimated credit losses.

 While the Company utilizes a systematic methodology in determining its allowance, the allowance is based on estimates, and ultimate losses may vary from current estimates. The estimates are reviewed periodically
 and, as adjustments become necessary, are reported in earnings in the periods in which they become known. For additional information, see Note 4, located in Item 8. "Financial Statements and Supplementary Data" in this Form 10-K.

 The allowance for credit losses on unfunded loan commitments is classified in other liabilities on the Consolidated Statements of Financial Condition. The Company analyzes the unfunded loan commitments utilizing
 historical utilization rates from the prior 12 months to predict losses. The allowance for credit losses on unfunded loan commitments is increased by charging the provision for credit losses. The provision for credit-losses – unfunded loan
 commitments was recognized in non-interest expense in 2022.

 Table

 We believe that our allowance for credit losses was adequate to absorb probable losses inherent in the loan and lease portfolio as of December 31, 2023 and 2022.

 Investment Securities — Investment securities are classified as held-to-maturity ("HTM") when the Company has the positive intent and ability to hold the
 securities to maturity. Investment securities are classified as available-for-sale ("AFS") when the Company has the intent of holding the security for an indefinite period of time, but not necessarily to maturity. The Company determines the
 appropriate classification at the time of purchase, and periodically thereafter. Investment securities classified at HTM are carried at amortized cost. Investment securities classified as AFS are reported at fair value. Purchase premiums and
 discounts are recognized in interest income using the interest method over the terms of the securities. Debt securities classified as HTM are carried at cost, net of the allowance for credit losses - securities, adjusted for amortization of
 premiums and discounts to the earliest callable date. Debt securities classified as AFS are measured at fair value. Unrealized holding gains and losses on debt securities classified as AFS are excluded from earnings and are reported net of tax as
 accumulated other comprehensive income ("AOCI"), a component of shareholders' equity, until realized. When AFS securities, specifically identified, are sold, the unrealized gain or loss is reclassified from AOCI to non-interest income.

 Management measures expected credit losses on HTM debt securities on a collective basis by major security type. The Company's HTM portfolio contains securities issued by U.S. government entities and agencies and
 municipalities. The Company uses industry historical credit loss information adjusted for current conditions to establish the allowance for credit losses on its HTM municipal bond portfolio.

 For AFS debt securities in an unrealized loss position, the Company first assesses whether it intends to sell, or is more likely than not that it will be required to sell, the security before recovery of its
 amortized cost basis. If the Company intends to sell the security, or it is more likely than not that the Company will be required to sell the security, before recovering its cost basis, the entire impairment loss would be recognized in earnings.
 If the Company does not intend to sell the security, and it is not more likely than not that the Company will be required to sell the security, the Company evaluates whether the decline in fair value has resulted from credit losses or other
 factors. In making this assessment, management considers the extent to which fair value is less than amortized costs, any changes to the rating of the security by a rating agency, and adverse conditions specifically related to the security, among
 other factors. If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security. Projected cash flows are discounted by the
 current effective interest rate. If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses is recorded for the credit loss, limited by the amount
 that the fair value is less than the amortized cost basis. The remaining impairment related to all other factors, the difference between the present value of the cash flows expected to be collected and fair value, is recognized as a charge to
 AOCI.

 Changes in the allowance for credit losses-securities are recorded as provision for (or reversal of) credit losses. Losses are charged against the allowance when management believes the non-collectability of an AFS
 security is confirmed or when either criteria regarding intent or requirement to sell is met.

 At December 31, 2023, the Company had no investment securities that were impaired.

 Fair Value Measurements — The Company discloses the fair value of financial instruments and the methods and significant assumptions used to estimate those
 fair values. The estimated fair value amounts have been determined by the Company using available market information and appropriate valuation methodologies. The use of assumptions and various valuation techniques, as well as the absence of
 secondary markets for certain financial instruments, will likely reduce the comparability of fair value disclosures between financial institutions. In some cases, book value is a reasonable estimate of fair value due to the relatively short
 period between origination of the instrument and its expected realization. For additional information, see Item 7A. "Quantitative and Qualitative Disclosures about Market Risk" and Note 11 located in Item 8. "Financial Statements and
 Supplementary Data" in this Form 10-K.

 Table

 Income Taxes — Income taxes are filed on a consolidated basis with our subsidiaries and we allocate income tax expense (benefit) based on each entity's
 proportionate share of the consolidated provision for income taxes. Deferred income tax assets and liabilities are recognized for the tax consequences of temporary differences between the reported amounts of assets and liabilities and their
 respective tax bases. Deferred income tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. The determination of the amount of deferred income tax assets that are more likely than not
 to be realized is primarily dependent on projections of future earnings, which are subject to uncertainty and estimates that may change given economic conditions and other factors. The realization of deferred income tax assets is assessed and a
 valuation allowance is recorded if it is "more likely than not" that all or a portion of the deferred income tax asset will not be realized. "More likely than not" is defined as greater than a 50% probability. All available evidence, both
 positive and negative, is considered to determine whether, based on the weight of that evidence, a valuation allowance is needed.

 Only tax positions that meet the "more likely than not" recognition threshold are recognized. The benefit of a tax position is recognized in the financial statements in the period during which, based on all
 available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with
 other positions. Tax positions that meet the "more likely than not" recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing
 authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits in the accompanying consolidated statements of financial
 condition along with any associated interest and penalties that would be payable to the taxing authorities upon examination. Interest expense and penalties associated with unrecognized tax benefits are classified as income tax expense in the
 consolidated statements of income.

 Impact of Recently Issued Accounting Standards

 See Note 1. "Summary of Significant Accounting Policies" to the Consolidated Financial Statements in "Item 8. Financial Statements and Supplementary Data" in this Form 10-K.

 Table

 Non-GAAP Measurements

 We use certain non-GAAP financial measures to provide meaningful supplemental information regarding the Company's operational performance and to enhance investors' overall understanding of such financial
 performance. The methodology for determining these non-GAAP measures may differ among companies. We used the following non-GAAP measures in this Form 10-K:

 •

 Tangible common equity ratio and tangible book value per common share: Given that the use of these measures is prevalent among banking regulators, investors, and analysts, we disclose them in
 addition to the related GAAP measures of return on average equity and book value per common share. The reconciliations of these non-GAAP measurements to the GAAP measurements are presented in the following tables for and as of the periods
 presented.

 Tangible Common Equity Ratio and

 Tangible Book Value Per Common Share

 2023

 2022

 2021

 (Dollars in thousands, except per share data)

 Shareholders' equity

 $

 $

 $

 463,136

 Less: Intangible assets

 13,419

 13,992

 14,585

 Tangible common equity

 $

 536,336

 $

 471,316

 $

 448,551

 Total Assets

 $

 5,308,928

 $

 5,327,399

 $

 5,177,720

 Less: Intangible assets

 13,419

 13,992

 14,585

 Tangible assets

 $

 5,295,509

 $

 5,313,407

 $

 5,163,135

 Tangible common equity ratio (1)

 10.13

 %

 8.87

 %

 8.69

 %

 Book value per common share (2)

 $

 735.00

 $

 631.63

 $

 586.51

 Tangible book value per common share (3)

 $

 717.05

 $

 613.42

 $

 568.04

 Common shares outstanding

 747,971

 768,337

 (1)

 Tangible common equity divided by tangible assets

 (2)

 Total common equity divided by common shares outstanding.

 (3)

 Tangible common equity divided by common shares outstanding.

 Table

 Results of Operations

 The following discussion and analysis is intended to provide a better understanding of the Company's performance during each of the years in the two-year period ended December 31, 2023 and the material changes in
 financial condition, operating income, and expense of the Company and its subsidiaries as shown in the accompanying consolidated financial statements. Information related to the comparison of the results of operations for the years ended December
 31, 2022 and 2021 can be found in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the 2022 Annual Report on Form 10-K filed with the SEC on March 15, 2023.

 Factors that determine the level of net income include the volume of earning assets and interest bearing liabilities, yields earned and rates paid, fee income, non-interest expense, the level of non-performing
 loans and other non-earning assets, and the amount of non-interest bearing liabilities supporting earning assets. Non-interest income includes card processing fees, service charges on deposit accounts, bank-owned life insurance income,
 gains/losses on the sale of investment securities, and gains/losses on deferred compensation plan investments. Non-interest expense consists primarily of salaries and employee benefits, cost of deferred compensation benefits, occupancy, data
 processing, deposit insurance, marketing, professional services, and other expenses.

 Earnings Performance

 The following table presents performance metrics for the periods indicated:

 (dollars in thousands, except per share amounts)

 2023

 2022

 Earnings Summary:

 Interest income

 $

 253,754

 $

 198,413

 Interest expense

 4,840

 9,407

 6,450

 Non-interest income

 6,178

 Non-interest expense

 Income before taxes

 116,553

 99,741

 Income tax expense

 Net Income

 $

 $

 Per Common Share Data:

 Diluted earnings per common share

 $

 116.61

 $

 96.55

 Book value per common share

 $

 735.00

 $

 631.63

 Tangible book value per common share (1)

 $

 717.05

 $

 613.42

 Performance Ratios:

 Return on average assets

 1.68

 %

 1.41

 %

 Return on average equity

 17.05

 %

 16.04

 %

 Net interest margin (tax equivalent)

 4.30

 %

 3.81

 %

 Yield on average loans and leases (tax equivalent)

 5.84

 %

 5.00

 %

 Cost of average total deposits

 0.80

 %

 0.09

 %

 Efficiency ratio

 45.31

 %

 46.84

 %

 Loan-to-deposit ratio

 78.52

 %

 74.00

 %

 Percentage of checking deposits to total deposits

 51.76

 %

 60.59

 %

 Capital Ratios Bancorp:

 Common equity tier 1 capital to risk-weighted assets

 12.30

 %

 11.57

 %

 12.53

 %

 11.80

 %

 13.78

 %

 13.06

 %

 10.38

 %

 9.36

 %

 Tangible common equity ratio (1)

 10.13

 %

 8.87

 %

 (1)

 See "Non-GAAP Measurements"

 Table

 Average Balance and Yields

 The following table sets forth a summary of average balances with corresponding interest income and interest expense as well as average yield, cost and net interest margin information for the periods presented.
 Average balances are derived from daily balances.

 Year ended December 31,

 2023

 2022

 Average

 Balance

 Interest

 Income /

 Expense

 Average

 Yield /

 Rate

 Average

 Balance

 Interest

 Income /

 Expense

 Average

 Yield /

 Rate

 ASSETS

 Interest earnings deposits in other banks and federal funds sold

 $

 519,331

 $

 26,872

 5.17

 %

 $

 704,082

 $

 12,102

 1.72

 %

 Investment securities: (1)

 Taxable securities

 929,503

 18,886

 2.03

 %

 1,044,954

 19,678

 1.88

 %

 Non-taxable securities (2)

 61,029

 2,888

 4.73

 %

 48,168

 1,984

 4.12

 %

 Total investment securities

 990,532

 21,774

 2.20

 %

 1,093,122

 21,662

 1.98

 %

 Loans: (3)

 1,295,101

 67,955

 5.25

 %

 1,202,548

 58,966

 4.90

 %

 732,241

 40,446

 5.52

 %

 705,222

 35,010

 4.96

 %

 393,100

 17,605

 4.48

 %

 369,619

 14,551

 3.94

 %

 179,297

 12,638

 7.05

 %

 182,523

 9,788

 5.36

 %

 2,599,739

 138,644

 5.33

 %

 2,459,912

 118,315

 4.81

 %

 479,552

 33,941

 7.08

 %

 440,510

 22,452

 5.10

 %

 292,079

 23,399

 8.01

 %

 262,461

 14,084

 5.37

 %

 125,680

 8,160

 6.49

 %

 94,040

 5,702

 6.06

 %

 5,528

 6.11

 %

 22,008

 3,469

 15.76

 %

 Total loans and leases

 3,502,578

 204,482

 5.84

 %

 3,278,931

 164,022

 5.00

 %

 1,213

 7.80

 %

 1,042

 6.70

 %

 Total interest earning assets

 5,027,990

 254,341

 5.06

 %

 5,091,684

 198,828

 3.90

 %

 Allowance for credit losses

 (71,461

)

 (62,588

)

 Non-interest earning assets

 313,823

 312,805

 Total average assets

 $

 5,270,352

 $

 5,341,901

 LIABILITIES AND SHAREHOLDERS' EQUITY

 Interest bearing deposits:

 Demand

 $

 983,340

 2,357

 0.24

 %

 $

 1,120,198

 1,497

 0.13

 %

 Savings and money market accounts

 1,631,818

 21,831

 1.34

 %

 1,542,310

 1,981

 0.13

 %

 Certificates of deposit greater than $250,000

 245,094

 7,680

 3.13

 %

 157,623

 0.29

 %

 Certificates of deposit less than $250,000

 273,281

 5,655

 2.07

 %

 215,044

 0.19

 %

 Total interest bearing deposits

 3,133,533

 37,523

 1.20

 %

 3,035,175

 4,349

 0.14

 %

 Short-term borrowings

 -

 0.00

 %

 -

 0.00

 %

 8.21

 %

 4.76

 %

 Total interest bearing liabilities

 3,143,844

 1.22

 %

 3,045,486

 4,840

 0.16

 %

 Non-interest bearing deposits

 1,528,375

 1,751,797

 Total funding

 4,672,219

 0.82

 %

 4,797,283

 4,840

 0.10

 %

 Other non-interest bearing liabilities

 80,098

 76,617

 Shareholders' equity

 518,035

 468,001

 Total average liabilities and shareholders' equity

 $

 5,270,352

 $

 5,341,901

 Net interest income and margin (4)

 $

 215,972

 4.30

 %

 $

 193,988

 3.81

 %

 Interest rate spread

 3.84

 %

 3.75

 %

 Tax Equivalent Adjustment

 (587

)

 (415

)

 4.28

 %

 3.80

 %

 (1)

 Excludes average unrealized (losses) of ($25.8) million and $(24.5) million for the years ended December 31, 2023, and 2022, respectively, which are included in non-interest earning assets.

 (2)

 Yields and interest income are calculated on a fully taxable equivalent basis using the current statutory federal tax rate.

 (3)

 Loan interest income includes loan fees of $6.1 million and $11.6 million for the years ended December 31, 2023 and 2022, respectively.

 (4)

 Net interest margin is computed by dividing net interest income by average interest earning assets.

 Table

 Interest-bearing deposits with banks and FRB balances are earning assets available to the Company. Average interest-bearing deposits with banks consisted primarily of FRB
 deposits. Balances with the FRB earned an average interest rate of 5.17% and 1.72% for the years ended December 31, 2023 and 2022, respectively. The increase was primarily the result of the Federal
 Reserve increasing rates by 425 basis points from March 2022 to December 2022 and 100 basis points from February 2023 to July 2023. Average interest-bearing deposits with banks was $519.3 million and $704.1
 million for the years ended December 31, 2023 and 2022, respectively and decreased primarily to fund loan growth. Interest income on interest-bearing deposits with banks was $26.9 million and $12.1 million for the years ended December 31, 2023
 and 2022, respectively.

 The investment portfolio is also a component of the Company's earning assets. Historically, the Company invested primarily in: (1) mortgage-backed securities issued by government-sponsored entities; (2) debt
 securities issued by the U.S. Treasury, government agencies and government-sponsored entities; and (3) investment grade bank-qualified municipal bonds. However, at certain times the Company has selectively added investment grade corporate
 securities (floating rate and fixed rate with maturities less than 7 years) to the portfolio in order to obtain yields that exceed government agency securities of equivalent maturity. Since the risk factor for these types of investments is
 generally lower than that of loans and leases, the yield earned on investments is generally less than that of loans and leases.

 Average total investment securities were $990.5 million and $1.1 billion for the years ended December 31, 2023 and 2022, respectively. The average yield on total investment securities was 2.20% and 1.98% for the
 years ended December 31, 2023 and 2022, respectively. See "Investment Securities" for a discussion of the Company's investment strategy in 2023.

 Average loans and leases held for investment were $3.5 billion and $3.3 billion for the years ended December 31, 2023 and 2022, respectively. The average yield on the loan and lease portfolio was 5.84% and 5.00%
 for the years ended December 31, 2023 and 2022, respectively. The increase in the loan yield reflects the increase in market interest rates over the prior year.

 Average interest-bearing deposits were $3.1 billion and $3.0 billion for the years ended December 31, 2023 and 2022, respectively. The average rate paid on interest-bearing deposits was 1.20% and 0.14% for the
 years ended December 31, 2023 and 2022, respectively. Total interest expense on interest-bearing deposits was $37.5 million and $4.3 million for the years ended December 31, 2023 and 2022, respectively, with the increase driven by increases in
 short-term market interest rates during 2023. The average rate paid on total funding costs was 0.82% and 0.10% for the years ended December 31, 2023 and 2022, respectively.

 Table

 Rate/Volume Analysis

 The following table shows the change in interest income and interest expense and the amount of change attributable to variances in volume, rates and the combination of volume and rates based on the relative changes
 of volume and rates. For purposes of this table, the change in interest due to both volume and rate has been allocated to change due to volume and rate in proportion to the relationship of absolute dollar amounts of change in each.

 Year Ended December 31, 2023

 compared with 2022

 Increase (Decrease) Due to:

 Volume

 Rate

 Net

 Interest income:

 Interest earnings deposits in other banks and federal funds sold

 $

 (3,913

)

 $

 18,683

 $

 14,770

 Investment securities:

 Taxable securities

 (2,274

)

 1,482

 (792

)

 Non-taxable securities

 Total investment securities

 (1,694

)

 1,805

 Loans:

 4,704

 4,285

 8,989

 1,379

 4,057

 5,436

 2,089

 3,054

 (176

)

 3,026

 2,850

 6,872

 13,457

 20,329

 2,134

 9,356

 11,489

 1,735

 7,579

 9,315

 2,030

 2,458

 (1,723

)

 (1,408

)

 (3,131

)

 Total loans and leases

 11,049

 29,411

 40,460

 -

 Total interest income

 5,443

 50,071

 55,513

 Interest expense:

 Interest bearing deposits:

 Demand

 (202

)

 1,062

 Savings and money market accounts

 19,729

 19,850

 Certificates of deposit greater than $250,000

 6,831

 7,220

 Certificates of deposit less than $250,000

 5,103

 5,244

 Total interest bearing deposits

 32,725

 33,174

 -

 Total interest expense

 33,080

 33,529

 $

 4,993

 $

 16,991

 $

 21,984

 Table

 Comparison of Results of Operations for the Years Ended December 31, 2023 and 2022

 Years Ended

 December 31

 2023

 2022

 $ Better /

 (Worse)

 % Better /

 (Worse)

 Selected Income Statement Information:

 Interest income

 $

 253,754

 $

 198,413

 $

 55,341

 27.89

 %

 Interest expense

 4,840

 (33,529

)

 (692.75

 %)

 21,812

 11.27

 %

 9,407

 6,450

 (2,957

)

 (45.84

 %)

 Net interest income after provision for credit losses

 205,978

 187,123

 18,855

 10.08

 %

 Non-interest income

 6,178

 8,736

 141.40

 %

 Non-interest expense

 (10,779

)

 (11.52

 %)

 Income before income tax expense

 116,553

 99,741

 16,812

 16.86

 %

 Income tax expense

 (3,588

)

 (14.56

 %)

 $

 $

 $

 13,224

 17.61

 %

 For the years ended December 31, 2023 and 2022, net income was $88.3 million compared with $75.1 million, respectively. The increase in net income was primarily the result of higher net interest income of $21.8
 million and an increase in non-interest income of $8.7 million, which included a $4.3 million death benefit gain on bank-owned life insurance ("BOLI") that was not present during 2022. This increase was offset by an increase in non-interest
 expense of $10.8 million, higher income tax expense of $3.6 million and a higher provision for credit losses of $3.0 million.

 Net Interest Income and Net Interest Margin

 For the year ended December 31, 2023, net interest income increased $21.8 million, or 11.27%, to $215.4 million compared with $193.6 million for the same period a year earlier. The increase is primarily the result
 of the net interest margin (tax equivalent basis) increasing 49 basis points to 4.30% compared with 3.81% for the same period a year earlier. The increase in the net interest margin was primarily the result of the Federal Reserve increasing the
 federal funds rate by 425 basis points from March 2022 to December 2022 and 100 basis points from February 2023 to July 2023. The loan yield for the year ended December 31, 2023, increased 84 basis points from 5.00% to 5.84% compared to the same
 period a year earlier. The cost of funds for the year ended December 31, 2023, increased by 72 basis points from 0.10% to 0.82% compared to the same period a year earlier.

 Provision for Credit Losses. The provision for credit losses in each period is a charge against earnings in that period. The provision is the amount
 required to maintain the allowance for credit losses at a level that, in management's judgment, is adequate to absorb expected losses, over the life of the loans and leases, unfunded loan commitments and HTM securities portfolios.

 The provision for credit losses for the year ended December 31, 2023, was $9.4 million compared with $6.5 million for the same period a year earlier. The increase in 2023 was primarily due to higher estimated
 losses inherent in the loan and lease portfolio directly related to quantitative and qualitative factors associated with the current economic environment. For the year ended December 31, 2023, the Company incurred net recoveries of $0.3 million
 compared with net charge-offs of $0.2 million for the same period a year earlier.

 Table

 Non-interest Income

 Years Ended

 December 31

 2023

 2022

 $ Better /

 (Worse)

 % Better /

 (Worse)

 Non-interest Income:

 Card processing

 6,686

 7,123

 $

 (437

)

 (6.14

 %)

 Gain on BOLI death benefit

 4,346

 -

 4,346

 -

 Net gain on deferred compensation benefits

 2,974

 2,523

 559.42

 %

 Service charges on deposit accounts

 2,755

 2,794

 (39

)

 (1.40

 %)

 Increase in cash surrender value of BOLI

 2,027

 2,233

 (206

)

 9.23

 %

 Net loss on sale of securities available-for-sale

 (8,199

)

 (10,689

)

 2,490

 (23.29

 %)

 Other

 4,325

 4,266

 1.38

 %

 Total non-interest income

 $

 $

 6,178

 $

 8,736

 141.40

 %

 Non-interest income increased $8.7 million to $14.9 million for 2023 compared with $6.2 million for the same period a year earlier. The year-over-year increase in non-interest income was primarily due to a $4.3
 million BOLI death benefit gain, a $2.5 million increase in net gains on deferred compensation plan investments and a $2.5 million decrease in net losses on the sale of investment securities during 2023 for interest rate risk management purposes
 to reposition the balance sheet.

 The Company recorded net gains on deferred compensation plan investments of $3.0 million in 2023 compared to net gains of $0.5 million in 2022. See Note 10, located in Item 8. "Financial Statements and
 Supplementary Data" for a description of these plans. Balances in non-qualified deferred compensation plans may be invested in financial instruments whose market value fluctuates based upon trends in interest rates and stock prices. Although GAAP
 requires these investment gains/losses be recorded in non-interest income, an offsetting entry is also required to be made to non-interest expense resulting in no net-effect on the Company's net income.

 Non-interest Expense

 Years Ended

 December 31

 2023

 2022

 $ Better / (Worse)

 % Better / (Worse)

 Non-interest Expense:

 Salaries and employee benefits

 70,883

 64,250

 $

 (6,633

)

 (10.32

 %)

 Data Processing

 5,293

 4,968

 (325

)

 (6.54

 %)

 Occupancy

 4,837

 4,717

 (120

)

 (2.54

 %)

 Net gain on deferred compensation benefits

 2,974

 (2,523

)

 (559.42

 %)

 Deposit insurance

 2,769

 1,771

 (998

)

 (56.35

 %)

 Professional services

 2,334

 2,459

 5.08

 %

 Marketing

 1,885

 1,324

 (561

)

 (42.37

 %)

 Other

 13,364

 13,620

 1.88

 %

 Total non-interest expense

 $

 $

 $

 (10,779

)

 (11.52

 %)

 Non-interest expense increased $10.8 million to $104.3 million for 2023 compared with $93.6 million for the same period a year earlier. The year-over-year increase was primarily comprised of a $6.6 million increase
 in salaries and employee benefits, a $2.5 million increase in net gains on deferred compensation plan investments, a $1.0 million increase in deposit insurance and a $0.6 million increase in marketing expenses. For the year ended December 31,
 2023, the Company's expense efficiency ratio was 45.31% compared with 46.84% for the same period a year earlier as the increase in revenues outpaced the increase in expenses.

 Table

 Net gains on deferred compensation plan obligations were $3.0 million in 2023 compared to net gains of $0.5 million in 2022. See Note 10, located in "tem 8. "Financial Statements and Supplementary Data" for a
 description of these plans. Balances in non-qualified deferred compensation plans may be invested in financial instruments whose market value fluctuates based upon trends in interest rates and stock prices. Although GAAP requires these gains on
 obligations to be recorded in non-interest expense, an offsetting entry is also required to be made to non-interest income resulting in no net-effect on the Company's net income.

 Income Tax Expense

 For the year ended December 31, 2023, income tax expense was $28.2 million, compared with $24.7 million for the same period a year earlier. For the year ended December 31, 2023, the effective tax rate was 24.23%
 compared with 24.72% for the same period a year earlier. The Company's effective tax rate for 2023 was lower, primarily due to a non-taxable BOLI death benefit gain of $4.3 million recognized during the year. The Company's effective tax rate can
 fluctuate from year to year due primarily to changes in the mix of taxable and tax-exempt earning sources. The effective rates were lower than the combined Federal and State statutory rate of 30% due primarily to BOLI death benefits, the cash
 surrender value of life insurance, credits associated with low income housing tax credit investments ("LIHTC"), and tax-exempt interest income on municipal securities and loans.

 Balance Sheet Analysis

 Total assets were $5.3 billion at December 31, 2023, a decrease of $18.5 million or 0.35% compared to December 31, 2022. Loans held for investment grew $142.3 million or 4.05% to $3.7 billion at December 31, 2023,
 compared with $3.5 billion at December 31, 2022. Total deposits were $4.7 billion at December 31, 2023 compared with $4.8 billion at December 31, 2022, a decrease of $91.2 million, or 1.92%.

 Cash and Cash Equivalents

 The Company's cash and cash equivalents consist of interest bearing deposits with banks and overnight investments in Federal Reserve balances. Interest bearing deposits with banks consisted primarily of FRB
 deposits. Since balances at the FRB are effectively risk free, the Company elected to maintain its excess cash at the FRB. Interest bearing deposits with banks totaled $338.4 million at December 31, 2023 and $514.9 million at December 31, 2022.
 The decrease was primarily due to funding loan growth during the year. The Company's total cash and cash equivalents as of December 31, 2023 represented 7.7% of the Company's total assets as compared to 11.0% as of December 31, 2022.

 Table

 Investment Securities

 The Company's net investment portfolio increased slightly by $2.0 million to $1.0 billion at December 31, 2023 compared to $998.2 million at December 31, 2022. During 2023, the Company purchased $85.3 million of`
 investment securities and sold $39.9 million for interest rate risk management purposes to reposition the balance sheet. The Company uses its investment portfolio to manage interest rate and liquidity risks. The Company's total investment
 portfolio as of December 31, 2023 represented 18.84% of the Company's total assets as compared to 18.74% at December 31, 2022.

 The carrying value of our portfolio of investment securities was as follows:

 2023

 2022

 Available-for-Sale Securities

 $

 -

 $

 4,964

 3,224

 4,427

 1,054

 9,581

 Other

 $

 $

 152,864

 (1) All mortgage-backed securities and collateralized mortgage obligations were issued by an agency or government sponsored entity of the U.S. Government.

 2023

 2022

 Held-to-Maturity Securities

 $

 664,728

 $

 702,858

 74,170

 80,186

 Municipal securities (2)

 Total held-to-maturity securities

 $

 $

 845,346

 (1) All mortgage-backed securities and collateralized mortgage obligations were issued by an agency or government
 sponsored entity of the U.S. Government.

 The following table shows the carrying value for contractual maturities of investment securities and the weighted average yields of such securities, including the benefit of tax-exempt securities:

 As of December 31, 2023

 Within One Year

 After One but

 Within Five Years

 After Five but

 Within Ten Years

 After Ten Years

 Total

 Yield

 Yield

 Yield

 Yield

 Yield

 Securities available-for-sale

 $

 5.91

 %

 $

 6.47

 %

 $

 6.65

 %

 $

 2,855

 6.44

 %

 3,224

 6.46

 %

 1.79

 %

 6,138

 2.57

 %

 4,916

 3.78

 %

 152,615

 3.52

 %

 3.44

 %

 -

 0.00

 %

 -

 0.00

 %

 -

 0.00

 %

 2.27

 %

 2.27

 %

 -

 0.00

 %

 5.71

 %

 -

 0.00

 %

 -

 0.00

 %

 5.71

 %

 Other

 8.20

 %

 -

 0.00

 %

 -

 0.00

 %

 -

 0.00

 %

 8.20

 %

 Total securities available-for-sale

 $

 5.94

 %

 $

 20,842

 4.79

 %

 $

 5,185

 3.93

 %

 $

 156,005

 3.57

 %

 $

 3.68

 %

 (1) All mortgage-backed securities and collateralized mortgage obligations were issued by an agency or government sponsored entity of the U.S. Government.

 Table

 As of December 31, 2023

 Within One Year

 After One but

 Within Five Years

 After Five but

 Within Ten Years

 After Ten Years

 Total

 Yield

 Yield

 Yield

 Yield

 Yield

 Securities held-to-maturity

 $

 -

 0.00

 %

 $

 2,058

 0.78

 %

 $

 12,418

 1.41

 %

 $

 650,252

 1.90

 %

 $

 664,728

 1.88

 %

 -

 0.00

 %

 -

 0.00

 %

 -

 0.00

 %

 74,170

 1.75

 %

 74,170

 1.75

 %

 4.01

 %

 15,962

 4.23

 %

 10,703

 3.76

 %

 51,250

 3.88

 %

 3.93

 %

 Total securities held-to-maturity

 $

 4.01

 %

 $

 18,020

 3.84

 %

 $

 23,121

 2.50

 %

 $

 775,672

 2.02

 %

 $

 2.07

 %

 (1) All mortgage-backed securities and collateralized mortgage obligations were issued by an agency or government sponsored entity of the U.S. Government.

 As of December 31, 2022

 Within One Year

 After One but

 Within Five Years

 After Five but

 Within Ten Years

 After Ten Years

 Total

 Yield

 Yield

 Yield

 Yield

 Yield

 Securities available-for-sale

 $

 4,964

 2.37

 %

 $

 -

 0.00

 %

 $

 -

 0.00

 %

 $

 -

 0.00

 %

 $

 4,964

 2.37

 %

 2.17

 %

 2.29

 %

 4.52

 %

 3,991

 4.52

 %

 4,427

 4.29

 %

 2.82

 %

 16,460

 2.31

 %

 15,156

 2.41

 %

 100,899

 1.82

 %

 1.95

 %

 -

 0.00

 %

 -

 0.00

 %

 -

 0.00

 %

 1,054

 2.35

 %

 1,054

 2.35

 %

 -

 0.00

 %

 9,581

 3.13

 %

 -

 0.00

 %

 -

 0.00

 %

 9,581

 3.13

 %

 Other

 4.60

 %

 -

 0.00

 %

 -

 0.00

 %

 -

 0.00

 %

 4.60

 %

 Total securities available-for-sale

 $

 5,290

 2.50

 %

 $

 26,094

 2.61

 %

 $

 15,536

 2.46

 %

 $

 105,944

 1.93

 %

 $

 152,864

 2.11

 %

 (1) All mortgage-backed securities and collateralized mortgage obligations were issued by an agency or government sponsored entity of the U.S. Government.

 As of December 31, 2022

 Within One Year

 After One but

 Within Five Years

 After Five but

 Within Ten Years

 After Ten Years

 Total

 Yield

 Yield

 Yield

 Yield

 Yield

 Securities held-to-maturity

 $

 -

 0.00

 %

 $

 -

 0.00

 %

 $

 18,197

 1.22

 %

 $

 684,661

 1.90

 %

 $

 702,858

 1.88

 %

 -

 0.00

 %

 -

 0.00

 %

 -

 0.00

 %

 80,186

 1.80

 %

 80,186

 1.80

 %

 5.92

 %

 8,058

 3.98

 %

 15,670

 3.70

 %

 37,691

 4.83

 %

 4.45

 %

 Total securities held-to-maturity

 $

 5.92

 %

 $

 8,058

 3.98

 %

 $

 33,867

 2.37

 %

 $

 802,538

 2.03

 %

 $

 845,346

 2.07

 %

 (1) All mortgage-backed securities and collateralized mortgage obligations were issued by an agency or government sponsored entity of the U.S. Government.

 Maturities are based on the final contractual payment dates, and do not reflect the impact of prepayments or early redemptions that may occur. Expected maturities of mortgage-backed and CMO securities may differ
 from contractual maturities because borrowers have the right to call or prepay obligations with or without penalties. The Company evaluates securities for expected credit losses at least on a quarterly basis, and more frequently when economic or
 market concerns warrant such evaluation.

 Table

 Loans and Leases

 Loans and leases can be categorized by borrowing purpose and use of funds. Common examples of loans and leases made by the Company include:

 Commercial and Agricultural Real Estate – These are loans secured by owner-occupied real estate, non-owner-occupied real estate, owner-occupied farmland, and multifamily
 residential properties. Commercial mortgage term loans can be made if the property is either income producing or scheduled to become income producing based upon acceptable pre-leasing, or the income will be the Bank's primary source of repayment
 for the loan. Loans are made both on owner occupied and investor properties; maturities generally do not exceed 15 years (and may have pricing adjustments on a shorter timeframe); amortizations of up to 25 years (30 years for multifamily
 residential properties); have debt service coverage ratios of 1.00 or better with a target of 1.25 or greater; and fixed rates that are most often tied to Treasury indices with an appropriate spread based on the amount of perceived risk in the
 loan.

 Real Estate Construction – These are loans for acquisition, development and construction and are secured by commercial or residential real estate. These loans are generally
 made only to experienced local developers with a successful track record; for projects in our service area; with Loan to Value ("LTV") below 75%; and where the property can generally be developed and sold within 2 years. Commercial construction
 loans are generally made only when there is an approved take-out commitment from the Bank or an acceptable financial institution or government agency. Most acquisition, development and construction loans are tied to the prime rate with an
 appropriate spread based on the amount of perceived risk in the loan.

 Single Family Residential Real Estate – These are loans primarily made on owner occupied residences; generally underwritten to income and LTV guidelines similar to those
 used by FNMA and FHLMC. However, the Company will make loans on rural residential properties up to 41 acres. Most residential loans have terms from ten to thirty years and carry fixed or variable rates priced to Treasury rates. The Company has
 always underwritten mortgage loans based upon traditional underwriting criteria and does not make loans that are known in the industry as "subprime," "no or low doc," or "stated income" loans.

 Home Equity Lines and Loans – These are loans made to individuals for home improvements and other personal needs. Generally, amounts do not exceed $500,000; but can be made
 for up to $1,000,000 in high cost counties. Combined Loan to Value ("CLTV") does not exceed 75%; FICO scores are at or above 670; Total Debt Ratios do not exceed 43%; and in some situations the Company is in a 1 st lien position.

 Agricultural – These are non-real estate loans and lines of credit made to farmers to finance agricultural production. Lines of credit are extended to finance the seasonal
 needs of farmers during peak growing periods; are usually established for periods no longer than 12 to 36 months; are often secured by general filing liens on livestock, crops, crop proceeds and equipment; and are most often tied to the prime
 rate with an appropriate spread based on the amount of perceived risk in the loan. Term loans are primarily made for the financing of equipment, expansion or modernization of a processing plant, or orchard/vineyard development; have maturities
 from five to seven years; and fixed rates that are most often tied to Treasury indices or variable rates tied to the prime rate with an appropriate spread based on the amount of perceived risk in the loan.

 Commercial – These are non-real estate loans and lines of credit to businesses that are sole proprietorships, partnerships, LLC's and corporations. Lines of credit are
 extended to finance the seasonal working capital needs of customers during peak business periods; are usually established for periods no longer than 12 to 36 months; are often secured by general filing liens on accounts receivable, inventory and
 equipment; and are most often tied to the prime rate with an appropriate spread based on the amount of perceived risk in the loan. Term loans are primarily made for the financing of equipment, expansion or modernization of a plant or purchase of
 a business; have maturities from three to seven years; and fixed rates that are most often tied to Treasury indices or variable rates tied to the prime rate with an appropriate spread based on the amount of perceived risk in the loan.

 Table

 Consumer – These are loans to individuals for personal use, and primarily include loans to purchase automobiles or recreational vehicles, and unsecured lines of credit. The
 Company has a minimal consumer loan portfolio.

 Commercial Leases – These are leases primarily to businesses and farmers for financing the acquisition of equipment. They can be either "finance leases" where the lessee
 retains the tax benefits of ownership but obtains 100% financing on their equipment purchases; or "true tax leases" where the Company, as lessor, places reliance on equipment residual value and in doing so obtains the tax benefits of ownership.
 Leases typically have a maturity of three to ten years, and fixed rates that are most often tied to Treasury indices with an appropriate spread based on the amount of perceived risk. Credit risks are underwritten using the same credit criteria
 the Company would use when making an equipment term loan. Residual value risk is managed with qualified, independent appraisers that establish the residual values the Company uses in structuring a lease.

 The Company accounts for leases with Investment Tax Credits ("ITC") under the deferred method as established in ASC 740-10. ITCs are viewed and accounted for as a reduction of the cost of the related assets and
 presented as deferred income in the Company's financial statements.

 Each loan or lease type involves risks specific to the: (1) borrower; (2) collateral; and (3) loan or lease structure. See "Results of Operations - Allowance for Credit Losses – Loans and Leases" for a more
 detailed discussion of risks by loan and lease type. The Company's current underwriting policies and standards are designed to mitigate the risks involved in each loan and lease type. The Company's policies require that loans and leases be
 approved only to those borrowers exhibiting a clear source of repayment and the ability to service existing and proposed debt. The Company's underwriting procedures for all loan and lease types require careful consideration of the borrower, the
 borrower's financial condition, the borrower's management capability, the borrower's industry, and the economic environment affecting the loan or lease.

 Most loans and leases made by the Company are secured, but collateral is the secondary or tertiary source of repayment; cash flow is our primary source of repayment. The quality and liquidity of collateral are
 important and must be confirmed before the loan or lease is made.

 In order to be responsive to borrower needs, the Company prices loans and leases: (1) on both a fixed rate and adjustable rate basis; (2) over different terms; and (3) based upon different rate indices as long as
 these structures are consistent with the Company's interest rate risk management policies and procedures. See Item 7A. "Quantitative and Qualitative Disclosures about Market Risk" in this Form 10-K for further details.

 Overall, the Company's loan and lease portfolio at December 31, 2023 totaled $3.7 billion, an increase of $142.3 million or 4.05% over December 31, 2022.

 Table

 The following table sets forth the distribution of the loan and lease portfolio by type and percent at the end of each period presented:

 2023

 2022

 Dollars

 Total

 Dollars

 Total

 Gross Loans and Leases

 $

 1,323,038

 36.10

 %

 $

 1,328,691

 37.73

 %

 20.24

 %

 20.64

 %

 10.91

 %

 11.01

 %

 5.80

 %

 4.73

 %

 2,677,391

 73.05

 %

 2,609,920

 74.11

 %

 13.62

 %

 13.59

 %

 8.56

 %

 8.93

 %

 169,684

 4.63

 %

 112,629

 3.20

 %

 5,212

 0.14

 %

 5,886

 0.17

 %

 $

 100.00

 %

 $

 3,521,718

 100.00

 %

 The following table shows the maturity distribution and interest rate sensitivity of the loan and lease portfolio of the Company as of December 31, 2023.

 Loan Contractual Maturity

 One Year or

 Less

 After One

 But Within

 Five Years

 After Five

 But Within

 Fifteen Years

 After Fifteen

 Years

 Total

 Gross loan and leases:

 $

 47,563

 $

 399,501

 $

 840,304

 $

 35,670

 $

 1,323,038

 30,304

 187,603

 448,403

 75,699

 4,326

 112,464

 283,050

 150,149

 61,688

 -

 228,158

 653,118

 1,401,696

 394,419

 2,677,391

 198,044

 207,202

 91,786

 2,341

 192,404

 100,159

 19,499

 1,675

 4,857

 52,136

 112,691

 -

 169,684

 3,662

 1,024

 -

 5,212

 $

 623,989

 $

 1,016,277

 $

 1,626,696

 $

 398,435

 $

 Rate Structure for Loans

 Fixed Rate

 $

 107,576

 $

 636,123

 $

 1,156,382

 $

 229,512

 $

 2,129,593

 Adjustable Rate

 516,413

 380,154

 470,314

 168,923

 1,535,804

 $

 623,989

 $

 1,016,277

 $

 1,626,696

 $

 398,435

 $

 Table

 The following table summarizes the loans for which the accrual of interest has been discontinued and loans more than 90 days past due and still accruing interest, and OREO (as hereinafter defined):

 2023

 2022

 Non-performing assets:

 Non-accrual loans and leases

 $

 -

 $

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 Total non-performing loans and leases

 $

 -

 $

 Other real estate owned ("OREO")

 $

 $

 Total non-performing assets

 $

 $

 1,444

 Selected ratios:

 Non-performing loans to total loans and leases

 0.00

 %

 0.02

 %

 Non-performing assets to total assets

 0.02

 %

 0.03

 %

 Non-Accrual Loans and Leases - Accrual of interest on loans and leases is generally discontinued when a loan or lease becomes contractually past due by 90 days or more with
 respect to interest or principal. When loans and leases are 90 days past due, but in management's judgment are well secured and in the process of collection, they may not be classified as non-accrual. When a loan or lease is placed on non-accrual
 status, all interest previously accrued but not collected is reversed. Income on such loans and leases is then recognized only to the extent that cash is received and where the future collection of principal is probable. Non-accrual loans and
 leases were zero at December 31, 2023, and $571,000 at December 31, 2022.

 Other Real Estate Owned – OREO represents real property taken either through foreclosure or through a deed in lieu thereof from the borrower.
 The Company records all OREO properties at amounts equal to or less than the fair market value of the properties based on current independent appraisals reduced by estimated selling costs. The Company reported $873,000 of foreclosed
 OREO at December 31, 2023, and 2022.

 Although management believes that non-performing loans and leases are generally well-secured and that potential losses are provided for in the Company's allowance for credit losses, there can be no assurance that
 future deterioration in economic conditions and/or collateral values will not result in future credit losses. See Note 4. "Loans and Leases", located in Item 8. "Financial Statements and Supplementary Data" in this Form 10-K for an allocation of
 the allowance classified to collateral dependent loans and leases.

 Loan Modifications to Borrowers Experiencing Financial Difficulties – In the normal course of business, the Company may execute loan
 modifications to borrowers experiencing financial difficulties. Some of these modifications include: term extension, principal forgiveness, rate reduction, other-than-insignificant payment delay, or any combination of those. ASU 2022-02
 requires certain disclosure of loans and leases that have been modified within the past 12 months and the effects that those modifications had on the modified loans and leases. Because the effect of most modifications made to borrowers
 experiencing financial difficulty is already included in the allowance for credit losses and because of the measurement methodologies used to estimate the allowance, a change to the allowance for credit losses is generally not recorded upon
 modification. Occasionally, the Company modifies loans by providing principal forgiveness that is deemed to be uncollectable; therefore, that portion of the loan is written off, resulting in a reduction of the amortized cost basis and a
 corresponding adjustment to the allowance for credit losses.

 Table

 The Company modified four loans, with two borrowers, in the aggregate amount of $6.4 million, during the year ended December 31, 2023. These loans are current and have no loss exposure as of December 31, 2023.

 Allowance for Credit Losses—Loans and Leases

 The Company maintains an allowance for credit losses ("ACL") under ASC Topic 326, Financial Instruments – Credit Losses (Topic 326), Measurement of Credit Losses on Financial
 Instruments ("CECL"). The allowance is established through a provision for credit losses, which is charged to expense. Additions to the allowance are expected to maintain the adequacy of the total allowance after credit losses and loan
 and lease growth. Credit exposures determined to be uncollectible are charged against the allowance. Cash received on previously charged off amounts is recorded as a recovery to the allowance. The overall allowance consists of two primary
 components: specific reserves related to impaired loans and leases and general reserves comprised of both quantitative and qualitative factors for current expected credit losses related to loans and leases that are not collateral dependent. The
 Company uses the Weighted Average Remaining Maturity ("WARM") method to calculate the ACL, as this method is deemed the most appropriate given the Company's current size and complexity. See Note 1, located in Item 8. "Financial Statements and
 Supplementary Data" of this Form 10-K for a detailed discussion of the Company's allowance for credit losses.

 Table

 The following table sets forth the activity in our ACL for loans and leases for the periods indicated:

 2023

 2022

 Allowance for credit losses:

 Balance at beginning of year

 $

 $

 61,007

 7,750

 6,057

 Charge-offs:

 -

 (170

)

 -

 -

 (14

)

 (25

)

 -

 -

 (14

)

 (195

)

 -

 (324

)

 -

 -

 -

 -

 (46

)

 (62

)

 Total charge-offs

 (60

)

 (581

)

 Recoveries:

 -

 -

 -

 -

 -

 -

 -

 Total recoveries

 Net recoeries / (charge-offs)

 (179

)

 Balance at end of year

 $

 $

 Selected financial information:

 Net loans and leases held-for-investment

 $

 $

 Average loans and leases

 3,502,578

 3,278,931

 Non-performing loans and leases

 -

 Allowance for credit losses to non-performing loans and leases

 0.00

 %

 11713.66

 %

 Net charge-offs / (recoveries) to average loans and leases

 (0.01

 %)

 0.01

 %

 Provision for credit losses to average loans and leases

 0.22

 %

 0.18

 %

 Allowance for credit losses to gross loans and leases held-for-investment

 2.05

 %

 1.90

 %

 The increase in ACL during the year ended 2023 was primarily related to higher estimated losses inherent in the loan and lease portfolio directly related to quantitative and qualitative factors associated with the
 current economic environment. In 2023, the Company recorded a provision for credit losses on unfunded commitments of $1.6 million due to changes in the utilization factors and a slight increase in unfunded commitments.

 2023

 2022

 ACL - Loans and leases

 $

 $

 ACL - Unfunded commitments

 3,690

 2,089

 Total ACL

 78,655

 68,974

 Table

 The following table indicates management's allocation of the ACL for loan and leases by loan type as of each of the following dates:

 2023

 2022

 Dollars

 Each Loan

 Type to Total

 Loans

 ACL to Each

 Loan Type

 Dollars

 Each Loan

 Type to Total

 Loans

 ACL to Each

 Loan Type

 Allowance for credit losses:

 $

 26,093

 36.10

 %

 1.97

 %

 $

 18,055

 37.73

 %

 1.36

 %

 7,744

 20.24

 %

 1.04

 %

 14,496

 20.64

 %

 1.99

 %

 7,770

 10.91

 %

 1.94

 %

 7,508

 11.01

 %

 1.94

 %

 4,432

 5.80

 %

 2.09

 %

 3,026

 4.73

 %

 1.82

 %

 46,039

 73.05

 %

 1.72

 %

 43,085

 74.11

 %

 1.65

 %

 13,380

 13.62

 %

 2.68

 %

 11,503

 13.59

 %

 2.40

 %

 8,872

 8.56

 %

 2.83

 %

 10,202

 8.93

 %

 3.24

 %

 6,537

 4.63

 %

 3.85

 %

 1,924

 3.20

 %

 1.71

 %

 0.14

 %

 2.63

 %

 0.17

 %

 2.91

 %

 Total allowance for credit losses

 $

 100.00

 %

 2.05

 %

 $

 100.00

 %

 1.90

 %

 Deposits

 Total deposits were $4.67 billion and $4.76 billion at December 31, 2023 and 2022, respectively or a decrease of $91.2 million or 1.92%. Deposits ebbed and flowed during the year with decreases in the first and
 fourth quarters of 2023 partially offset by increases in the second and third quarters of 2023. Our deposit base has some seasonality from the agricultural portfolio, but the year-over-year decrease in 2023 was primarily due to a shift in
 customer behavior to higher yielding deposit products or other investment alternatives such as U.S. Treasuries or money market funds given the interest rate environment.

 Non-interest bearing demand deposits were $1.48 billion and $1.76 billion at December 31, 2023 and 2022, respectively. Non-interest bearing deposits were 31.76% and 36.96% of total deposits, at December 31, 2023
 and 2022, respectively. Interest bearing deposits were $3.19 billion and $3.00 billion as of December 31, 2023 and 2022, respectively. Interest bearing deposits are comprised of interest-bearing transaction accounts, money market accounts,
 regular savings accounts, and certificates of deposit. The decrease in non-interest bearing deposits and the increase in interest-bearing deposits primarily reflects changes in customer behavior as customers shifted from non-interest bearing
 accounts to higher interest earning accounts given the interest rate environment during 2023.

 Certificates of deposit accounts increased $313.2 million, or 94.52%, to $664.6 million at December 31, 2023 compared with $331.4 million at December 31, 2022. Savings and money market accounts increased $63.4
 million, or 4.11%, to $1.61 billion at December 31, 2023 compared with $1.54 billion at December 31, 2022. Demand and non-interest bearing transaction accounts totaled $2.42 billion at December 31, 2023, a decrease of $467.8 million, or 16.22%,
 from $2.88 billion at December 31, 2022.

 Table

 The following table shows the average balances and average rate paid on the categories of deposits for each of the periods presented:

 2023

 2022

 2021

 Average Balance

 Interest Expense

 Average Rate

 Average Balance

 Interest Expense

 Average Rate

 Average Balance

 Interest Expense

 Average Rate

 Total deposits:

 Interest bearing deposits:

 Demand

 $

 983,340

 $

 2,357

 0.24

 %

 $

 1,120,198

 $

 1,497

 0.13

 %

 $

 1,024,009

 $

 1,128

 0.11

 %

 Savings and money market

 1,631,818

 21,831

 1.34

 %

 1,542,310

 1,981

 0.13

 %

 1,352,258

 1,458

 0.11

 %

 Certificates of deposit greater than $250,000

 245,094

 7,680

 3.13

 %

 157,623

 0.29

 %

 170,040

 0.41

 %

 Certificates of deposit less than $250,000

 273,281

 5,655

 2.07

 %

 215,044

 0.19

 %

 235,746

 0.31

 %

 Total interest bearing deposits

 3,133,533

 37,523

 1.20

 %

 3,035,175

 4,349

 0.14

 %

 2,782,053

 4,017

 0.14

 %

 Non-interest bearing deposits

 1,528,375

 1,751,797

 1,610,611

 $

 4,661,908

 $

 37,523

 0.80

 %

 $

 4,786,972

 $

 4,349

 0.09

 %

 $

 4,392,664

 $

 4,017

 0.09

 %

 Deposits are gathered from individuals and businesses in our market areas. The interest rates paid are competitively priced for each particular deposit product and structured to meet our funding requirements. The
 significant increase in short-term interest rates during 2022 and 2023 placed pressure on deposit pricing. The average cost of total deposits, including non-interest bearing deposits, increased to 0.80% for 2023 compared to 0.09% for 2022. The
 Company had no brokered deposits during 2023.

 The following table shows deposits with a balance greater than $250,000 at December 31, 2023 and 2022:

 December 31

 2023

 2022

 Non-Maturity Deposits greater than $250,000

 $

 2,496,749

 $

 2,872,754

 Certificates of deposit greater than $250,000, by maturity:

 Less than 3 months

 84,460

 45,078

 3 months to 6 months

 111,866

 30,426

 6 months to 12 months

 107,080

 44,189

 More than 12 months

 15,423

 9,153

 Total certificates of deposit greater than $250,000

 $

 318,829

 $

 128,846

 Total deposits greater than $250,000

 $

 2,815,578

 $

 3,001,600

 Refer to the Average Balance and Yield Schedule located in this "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" for information on separate deposit categories.

 The Bank participates in a program wherein the State of California places time deposits with the Bank at the Bank's option. At December 31, 2023 and 2022, the Bank had $3.0 million of these deposits.

 Total estimated uninsured deposits based on our regulatory reporting amounted to $2.2 billion and $2.3 billion at December 31, 2023 and December 31, 2022, respectively.

 Federal Home Loan Bank Advances and Federal Reserve Bank Borrowings

 Lines of Credit with the Federal Home Loan Bank and FRB are other key sources of funds to support earning assets and liquidity. These sources of funds are also used to manage the Company's interest rate risk
 exposure and, as opportunities arise, to borrow and invest the proceeds at a positive spread through the investment portfolio. There were no FHLB advances at December 31, 2023 or 2022. There were no Federal Funds purchased or advances from the
 FRB at December 31, 2023 or 2022.

 Long-Term Subordinated Debentures

 On December 17, 2003, the Company raised $10.0 million through the sale of subordinated debentures to an off-balance sheet trust and its sale of trust-preferred securities. See Note 9. "Long-Term Subordinated
 Debentures" located in Item 8. "Financial Statements and Supplementary Data" in this Form 10-K. Although this amount is reflected as subordinated debt on the Company's balance sheet, under current regulatory guidelines, our Trust Preferred
 Securities will continue to qualify as regulatory capital.

 Table

 These securities accrue interest at a variable rate based upon 3-month SOFR plus 2.85%. Interest rates reset quarterly (the next reset is March 18, 2024) and the rate was 8.49% as of December 31, 2023. The average
 rate paid for these securities was 8.21% in 2023 and 4.76% in 2022. Additionally, if the Company decided to defer interest on the subordinated debentures, the Company would be prohibited from paying cash dividends on the Company's common stock.

 Capital Resources

 The Company relies primarily 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 ensure depositor protection. Shareholders' Equity totaled $549.8 million at December 31, 2023, and $485.3 million at the end of 2022, an increase of $64.5 million or 13.3%.

 The Company and the Bank are subject to various regulatory capital adequacy guidelines as outlined under Part 324 of the FDIC Rules and Regulations. Failure to meet minimum capital requirements can initiate certain
 mandatory, and possibly discretionary, actions by regulators that, if undertaken, could have a direct material effect on the Company's and the Bank's financial statements. Under capital adequacy guidelines and the regulatory framework for prompt
 corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the Company and the Bank's assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. The
 Company and the Bank's capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.

 As of December 31, 2023, the Company was in compliance with all of these capital requirements and there were no restrictions on the Company's business activity. As of December 31, 2023 the Bank met the requirements
 to be categorized as "well capitalized" under the FDIC regulatory framework for prompt corrective action. To be categorized as "well capitalized," the Bank must maintain minimum total risk-based, Tier 1 risk-based and Tier 1 leverage ratios as
 set forth in the following tables as of December 31, 2023 and 2022.

 The Company's and the Bank's actual and required capital amounts and ratios are as follows:

 Actual

 Required for Capital

 Adequacy Purposes

 Minimum to be Categorized as

 "Well Capitalized" Under

 Prompt Corrective Action

 Regulation

 Ratio

 Ratio

 Ratio

 Bancorp:

 $

 546,045

 12.30

 %

 $

 199,724

 4.50

 %

 N/A

 N/A

 556,045

 12.53

 %

 266,298

 6.00

 %

 N/A

 N/A

 611,815

 13.78

 %

 355,064

 8.00

 %

 N/A

 N/A

 556,045

 10.38

 %

 214,267

 4.00

 %

 N/A

 N/A

 Bank:

 $

 557,500

 12.56

 %

 $

 199,722

 4.50

 %

 $

 288,487

 6.50

 %

 557,500

 12.56

 %

 266,295

 6.00

 %

 355,061

 8.00

 %

 613,270

 13.82

 %

 355,061

 8.00

 %

 443,826

 10.00

 %

 557,500

 10.42

 %

 214,078

 4.00

 %

 267,597

 5.00

 %

 Table

 Actual

 Required for Capital

 Adequacy Purposes

 Minimum to be Categorized as

 "Well Capitalized" Under

 Prompt Corrective Action

 Regulation

 Ratio

 Ratio

 Ratio

 Bancorp:

 $

 493,438

 11.57

 %

 $

 191,984

 4.50

 %

 N/A

 N/A

 503,438

 11.80

 %

 255,978

 6.00

 %

 N/A

 N/A

 556,964

 13.06

 %

 341,305

 8.00

 %

 N/A

 N/A

 503,438

 9.36

 %

 215,201

 4.00

 %

 N/A

 N/A

 Bank:

 $

 502,838

 11.79

 %

 $

 191,970

 4.50

 %

 $

 277,290

 6.50

 %

 502,838

 11.79

 %

 255,960

 6.00

 %

 341,280

 8.00

 %

 556,361

 13.04

 %

 341,280

 8.00

 %

 426,600

 10.00

 %

 502,838

 9.35

 %

 215,018

 4.00

 %

 268,772

 5.00

 %

 On November 8, 2022, the Board of Directors authorized an extension to its share repurchase program through December 31, 2024 for an additional $20.0 million of the
 Company's common stock ("Repurchase Plan"), which represented approximately 4% of outstanding shareholders' equity at the time of approval. Repurchases by the Company under the Repurchase Plan may be made from time to time through open market
 purchases, trading plans established in accordance with SEC rules, privately negotiated transactions, or by other means. On November 14, 2023, the Board of Directors authorized a further extension to its share repurchase program through December
 31, 2024 for an additional $25.0 million of the Company's common stock, which represented approximately 4% of outstanding shareholders' equity as of December 31, 2023.

 During 2023, the Company repurchased 20,366 shares under the Repurchase Plan, for a total of $20.2 million under the combined $20.0 million share repurchase program authorized in November 2022 and the additional
 $25.0 million share repurchase program authorized in November 2023. As of December 31, 2023, there remains $24.5 million authorized for repurchases under the Repurchase Plan.

 From January 2022 through December 31, 2023, the Company reduced the number of shares outstanding by 41,675 shares or 5.28%, due to share repurchases. Repurchases are made at market prices through open market
 purchases, trading plans established in accordance with SEC rules and privately negotiated transactions. In August 2022, the Inflation Reduction Act of 2022 ("IRA") was enacted. Among other things, the IRA imposes an excise tax equal to 1% of the
 fair market value of any stock repurchased by covered corporations during a taxable year, subject to certain limits and provisions.

 Off-Balance-Sheet Arrangements

 Off-balance-sheet arrangements are any contractual arrangement to which an unconsolidated entity is a party, under which the Company has: (1) any obligation under a guarantee
 contract; (2) a retained or contingent interest in assets transferred to an unconsolidated entity or similar arrangement that serves as credit, liquidity, or market risk support to that entity for such assets; (3) any obligation under certain
 derivative instruments; or (4) any obligation under a material variable interest held by us in an unconsolidated entity that provides financing, liquidity, market risk, or credit risk support to the Company, or engages in leasing, hedging, or
 research and development services with the Company. The Company had the following off balance sheet commitments as of the dates indicated.

 Table

 The following table sets forth our off-balance sheet lending commitments as of December 31, 2023:

 Amount of Commitment Expiration per Period

 Total

 Committed

 Less than

 One Year

 One to

 Three

 Years

 Three to

 Five Years

 After Five

 Years

 Off-balance sheet commitments

 Commitments to extend credit

 $

 1,150,142

 $

 584,486

 $

 337,252

 $

 43,055

 $

 185,349

 Standby letters of credit

 16,858

 11,657

 3,781

 Total off-balance sheet commitments

 $

 1,167,000

 $

 596,143

 $

 341,033

 $

 43,975

 $

 185,849

 The Company's exposure to credit loss in the event of nonperformance by the other party with regard to standby letters of credit, undisbursed loan commitments, and financial guarantees is represented by the
 contractual notional amount of those instruments. Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. The Company uses the same credit policies in making
 commitments and conditional obligations as it does for recorded balance sheet items. The Company may or may not require collateral or other security to support financial instruments with credit risk. Evaluations of each customer's
 creditworthiness are performed on a case-by-case basis. Additionally, the Company maintains an allowance for credit losses for unfunded loan commitments, which totaled $3.7 million and $2.1 million at December 31, 2023 and December 31, 2022,
 respectively.

 Standby letters of credit are conditional commitments issued by the Company to guarantee performance of or payment for a customer to a third-party. Most standby letters of credit have maturity dates ranging from 1
 to 60 months with final expiration in August 2028. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee.

 Liquidity

 The ability to have readily available funds sufficient to repay maturing liabilities is of primary importance to depositors, creditors and regulators. In an effort to satisfy our liquidity needs, we actively manage
 our assets and liabilities. We have access to immediate liquid resources in the form of cash, which totaled $410.6 million or 7.73% of total assets as of December 31, 2023. The majority of cash is on deposit with the FRB and amounted to $338.4
 million. Potential sources of liquidity also include investment securities in our available-for-sale securities portfolio, our ability to sell loans in the secondary market, and our ability to borrow from the FRB and FHLB. Our diversified deposit
 portfolio has historically provided us with a long-term source of stable low cost funding. Maturities and payments on outstanding loans and investment securities also provide a steady flow of funds. Our liquidity, represented by cash borrowing
 lines, federal funds and available for sale securities, is a result of our operating, investing and financing activities and related cash flows. In order to ensure funds are available at all times, we devote resources to projecting the amount of
 funds that will be required and we maintain relationships with a diversified client base so funds are accessible. Liquidity requirements can also be met through short-term borrowings or the disposition of short-term assets.

 Table

 We had the following borrowing lines available at December 31, 2023:

 As of December 31, 2023

 Total Credit

 Line Limit

 Current

 Credit Line

 Available

 Outstanding

 Remaining

 Credit Line

 Available

 Value of

 Collateral

 Pledged

 Additional liquidity sources:

 Federal Reserve BIC

 $

 1,141,910

 $

 1,141,910

 $

 -

 $

 1,141,910

 $

 1,513,447

 Federal Home Loan Bank

 760,054

 760,054

 -

 760,054

 1,271,227

 FRB Bank Term Funding Program

 134,910

 134,910

 -

 134,910

 134,910

 US Bank Fed Funds

 -

 -

 PCBB Fed Funds

 -

 -

 FHLB Fed Funds

 18,000

 18,000

 -

 18,000

 -

 Total additional liquidity sources

 $

 2,154,874

 $

 2,154,874

 $

 -

 $

 2,154,874

 $

 2,919,584

 We continued our focus on maintaining a strong liquidity position throughout 2023 and we believe our liquid assets and short-term borrowing credit lines are adequate to meet our cash flow needs for loan and lease
 funding and deposit cash withdrawal for the foreseeable future. As of December 31, 2023, we had internal sources of liquidity comprised of $410.6 million in cash and $242.9 million of unencumbered investment securities, which represented in the
 aggregate 12.31% of total assets. We also had $2.2 billion in external sources of liquidity as outlined in the table above bringing our total available liquidity to $2.8 billion. Our pledged collateral on short-term borrowing lines was comprised
 of $2.8 billion in loans, $135.0 million in investment securities pledged at par value and $1.9 million in investment securities held at market value. We have the option of either borrowing on our credit lines or selling these investment
 securities for cash flow needs.

 On a long-term basis, we intend to meet our liquidity needs by changing the relative distribution of our asset portfolios by reducing our investment or loan and lease volumes, or selling or encumbering assets.
 Further, we would increase liquidity by soliciting higher levels of deposit accounts through promotional activities and/or borrowing from our correspondent banks as well as the FHLB. At the current time, our long-term liquidity needs primarily
 relate to funds required to support loan and lease originations and commitments and deposit withdrawals.

 We believe we can meet all of these needs from existing liquidity sources. Our liquidity is comprised of three primary classifications: cash flows from or used in operating activities; cash flows from or used in
 investing activities; and cash flows from or used in financing activities. Net cash provided by or used in operating activities has consisted primarily of net income adjusted for certain non-cash income and expense items such as the credit loss
 provision, investment and other amortization and depreciation.

 Our primary investing activities are the origination of loans and leases and purchases and sales of investment securities. As of December 31, 2023, we had unfunded loan commitments of $1.15 billion and unfunded
 letters of credit of $16.9 million. At December 31, 2023, we believe that we had sufficient funds available to meet current loan commitments.

 Table

 Item 7A.

 Quantitative and Qualitative Disclosures About Market Risk

 Market risk is the risk of loss in a financial instrument arising from adverse changes in market prices and rates, foreign currency exchange rates, commodity prices and equity prices. Our market risk arises
 primarily from interest rate risk inherent in our lending and deposit taking activities. Management actively monitors and manages our interest rate risk exposure. We do not have any market-risk sensitive instruments entered into for trading
 purposes. In monitoring interest rate risk we continually analyze and manage our earning assets and funding liabilities based on their payment streams and interest rates, the timing of their maturities and/or prepayments, and their sensitivity to
 actual or potential changes in market interest rates.

 Management uses various asset/liability strategies to manage the re-pricing characteristics of our assets and liabilities designed to ensure that exposure to interest rate fluctuations is limited within our
 guidelines of acceptable levels of risk-taking. Hedging strategies, including the terms and pricing of loans and deposits, and managing the deployment of our securities, are considered to reduce mismatches in interest rate re-pricing
 opportunities of portfolio assets and their funding sources.

 Since our earnings are primarily dependent on our ability to generate net interest income, we focus on actively monitoring and managing the effects of adverse changes in interest rates on our net interest income.
 Our Asset Liability Management Committee ("ALCO"), which is comprised of members of the Board of Directors and Executive Officers, manages market risk. ALCO monitors interest rate risk by analyzing the potential impact on net interest income from
 potential changes in interest rates, and considers the impact of alternative strategies or changes in balance sheet structure. ALCO manages our balance sheet in part to maintain the potential impact of changes in interest rates on net interest
 income within acceptable ranges despite changes in interest rates. ALCO and management utilize a third party to assist with asset liability management including the use of simulation models.

 Our exposure to interest rate risk is reviewed on at least a quarterly basis by ALCO. Interest rate risk exposure is measured using interest rate sensitivity analysis to determine our change in net interest income
 in the event of hypothetical changes in interest rates. If potential changes to net interest income resulting from hypothetical interest rate changes are not within risk tolerances determined by ALCO, and approved by the full Board of Directors,
 management may make adjustments to the Company's asset and liability mix to bring interest rate risk levels within the Board approved limits.

 Net Interest Income Simulation. In order to measure interest rate risk, we use a simulation model to project changes in net interest income that result from forecasted
 changes in interest rates. This analysis calculates the difference between net interest income forecasted using a rising and a falling interest rate scenario and a net interest income forecast using a base market interest rate derived from the
 current Treasury yield curve. The income simulation model includes various assumptions regarding the re-pricing relationships for each of our products. Many of our assets are floating rate loans, which are assumed to re-price immediately, and to
 the same extent as the change in market rates according to their contracted index.

 Some loans and investment vehicles include the opportunity of prepayment (embedded options), and accordingly the simulation model uses various proprietary models to estimate these prepayments and assumes the
 reinvestment of the proceeds at current yields. Our non-term deposit products re-price more slowly, usually changing less than the change in market rates and at our discretion.

 This analysis indicates the impact of changes in net interest income for the given set of rate changes and assumptions. It assumes the balance sheet size remains static throughout the simulation horizon by
 replacing existing cash flows/amortization into similar products at current rates to try and capture the ongoing activity of the balance sheet without forecasting any level of growth. It does not account for all factors that affect this analysis,
 including changes by management to mitigate the effect of interest rate changes or secondary impacts such as changes to our credit risk profile as interest rates change.

 Furthermore, loan prepayment-rate estimates and spread relationships change regularly. Interest rate changes create changes in actual loan prepayment rates that will differ from the market estimates incorporated in
 this analysis. Changes that vary significantly from the assumptions may have significant effects on our net interest income.

 Table

 For the rising and falling interest rate scenarios, the base market interest rate forecast was increased or decreased, on an instantaneous and sustained basis, by 100, 200 and 300 basis points. We then evaluate the
 simulation results using two approaches: Net Interest Income at Risk ("NII at Risk") and Economic Value of Equity ("EVE"). Under NII at Risk, the impact on net interest income from the changes in interest rates on interest-earning assets and
 interest-bearing liabilities is modeled using various assumptions of assets and liabilities. EVE measures the period-end present value of assets minus the present value of liabilities. Management uses this value to measure the changes in the
 economic value of the Company under various interest rate scenarios.

 Based on our quarterly simulations, our net interest margin exposure related to these hypothetical changes in market interest rates was within the current guidelines established by us. Our simulation model
 highlights the fact that our balance sheet is asset sensitive, which means that our net interest income rises in a rising interest rate environment as rates earned on our interest-bearing assets reprice higher and at a faster pace than rates paid
 on our interest-bearing liabilities.

 The ratio of variable to fixed-rate loans in our loan portfolio, the ratio of short-term (maturing at a given time within 12 months) to long-term loans, and the ratio of our demand, money market and savings
 deposits to CDs (and their time periods), are the primary factors affecting the sensitivity of our net interest income to changes in market interest rates. Our short-term loans are typically priced at prime plus a margin, and our long-term loans
 are typically priced based on a specific term of the Treasury Curve for comparable maturities, plus a margin. The composition of our rate-sensitive assets or liabilities is subject to change and could result in a more unbalanced position that
 would cause market rate changes to have a greater impact on our net interest margin. As of December 31, 2023, our loan and lease portfolio was comprised of 58.1% fixed rate and 41.9% variable rate loans. The vast majority of our variable loans
 also contain interest rate floors which are designed to mitigate the impact of decreases in interest rates as index rates drop.

 The following table presents the projected change in the Company's net interest income over the next twelve months and the economic value of equity at December 31, 2023, that would occur upon an immediate change in
 interest rates, but without giving effect to any steps that management might take to counteract that change:

 Estimated Change in

 Net Interest Income (NII)

 (as a % of NII)

 Estimated Change in

 Economic Value of Equity

 (EVE)

 (as a % of EVE)

 +300 bps

 0.9

 %

 (8.1

 %)

 +200 bps

 0.4

 %

 (5.9

 %)

 +100 bps

 0.4

 %

 (2.2

 %)

 0 bps

 -

 -

 -100 bps

 (2.0

 %)

 (1.6

 %)

 -200 bps

 (4.1

 %)

 (5.6

 %)

 -300 bps

 (6.4

 %)

 (12.4

 %)

 Table

 Item 8.

 Financial Statements and Supplementary
 Data

 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

 Page

 Report of Independent Registered Public Accounting Firm ( Eide Bailly LLP, San Ramon, California, PCAOB ID: 286)

 Report of Independent Registered Public Accounting Firm ( Moss Adams LLP, San Francisco, California, PCAOB ID: 659)

 Consolidated Financial Statements

 Consolidated Statements of Financial Condition as of December 31, 2023, and 2022

 Consolidated Statements of Income for the three years ended December 31, 2023, 2022 and 2021

 Consolidated Statements of Comprehensive Income for the three years ended December 31, 2023, 2022 and 2021

 Consolidated Statements of Changes in Shareholders' Equity for the three years ended December 31, 2023, 2022 and 2021

 Consolidated Statements of Cash Flows for the three years ended December 31, 2023, 2022 and 2021

 Notes to the Consolidated Financial Statements

 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 To the Board of Directors and Shareholders

 Lodi, California

 Opinions on the Consolidated Financial Statements and Internal Control
 Over Financial Reporting

 We have audited the accompanying consolidated statements of financial
 condition of Farmers & Merchants Bancorp and subsidiaries (the "Company") as of December 31, 2023 and 2022, and the related consolidated statements of income, comprehensive income, changes in shareholders' equity, and cash flows
 for the years then ended, and the related notes (collectively referred to as the "consolidated financial statements"). We also have audited the Company's internal control over financial reporting as of December 31, 2023, based on
 criteria established in 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

 In our opinion, the consolidated financial statements present fairly,
 in all material respects, the consolidated financial position of the Company as of December 31, 2023 and 2022, and the consolidated results of its operations and its cash flows for the years then ended, in conformity with accounting
 principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on criteria
 established in 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

 Basis for Opinions

 The Company's management is responsible for these consolidated
 financial statements, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on
 Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company's consolidated financial statements and an opinion on the Company's internal control over financial reporting based on our audits.
 We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws
 and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 We conducted our audits in accordance with the standards of the PCAOB.
 Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective
 internal control over financial reporting was maintained in all material respects.

 Our audits of the consolidated financial statements included
 performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that responds to those risks. Such procedures included examining, on
 a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as
 evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk
 that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in
 the circumstances. We believe that our audits provide a reasonable basis for our opinions.

 Definition and Limitations of Internal Control Over Financial
 Reporting

 An entity's internal control over financial reporting is a process
 designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United
 States of America. An entity's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions
 and dispositions of the assets of the entity; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and
 that receipts and expenditures of the entity are being made only in accordance with authorizations of management and directors of the entity; and (3) provide reasonable assurance regarding prevention or timely detection of
 unauthorized acquisition, use, or disposition of the entity's assets that could have a material effect on the financial statements.

 Because of its inherent limitations, internal control over financial
 reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree
 of compliance with the policies or procedures may deteriorate.

 Critical Audit Matter

 The critical audit matter communicated below is a matter arising from
 the current-period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the consolidated
 financial statements and (2) involved especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a
 whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

 Allowance for Credit Losses – Loans and Leases

 The Company has a loan portfolio of $3.7 billion and related allowance
 for credit losses - loans and leases (ACL) of $75.0 million as of December 31, 2023. As discussed in Notes 1 and 4 of the Company's consolidated financial statements, the ACL represents management's estimate of expected credit losses
 over the life of the loan and lease portfolios. The ACL is estimated using relevant available information relating to past events, current economic conditions, and reasonable and supportable forecasts, as well as qualitative
 adjustments applied on a portfolio segment basis. The qualitative adjustments are used to bring the ACL to the level management believes is appropriate based on factors that are otherwise unaccounted for in the quantitative process.

 Auditing these complex judgments and assumptions involves especially
 challenging auditor judgment due to the nature and extent of audit evidence and effort required to address these matters, including the extent of specialized skill or knowledge needed.

 Our considerations and procedures performed to address this critical
 audit matter included:

 •

 Obtaining an understanding of the Company's process for establishing the ACL, including the models selected by management to estimate quantitative components of the ACL and qualitative adjustments made to the ACL. This
 includes the process utilized by management to challenge the model results and determine the best estimate of the ACL as of the statement of financial condition date.

 •

 Evaluating the design and testing the operating effectiveness of controls relating to the development and approval of the ACL methodology, management's identification, determination and controls related to the significant
 assumptions used in the models, controls around the reliability and accuracy of the data used in the models, analysis of the ACL results and management's review and approval of the ACL.

 •

 Determining whether the loan portfolio is segmented by similar risk characteristics.

 •

 Evaluating the identification and measurement of the qualitative adjustments, including the basis for concluding an adjustment was warranted and compared the adjustments utilized by management to both internal portfolio
 metrics and external macroeconomic data to support the adjustments and evaluating the trends in such adjustments. We evaluated information that corroborates or contradicts management's identification and measurement of
 qualitative factors.

 •

 Testing the completeness and accuracy of internal loan level data used as the basis for the calculation.

 •

 Testing the mathematical accuracy and computation of the ACL.

 /s/ Eide Bailly LLP

 We have served as the Company's auditor since 2022.

 San Ramon, California

 March 14, 2024

 Report of Independent Registered Public Accounting Firm

 To the Shareholders and the Board of Directors of

 Opinion on the Financial Statements

 We have
 audited the accompanying consolidated statement of financial condition of Farmers &
 Merchants Bancorp and subsidiaries (the Company) as of December 31, 2021, the related consolidated statement of income, comprehensive income, changes in shareholders' equity, and cash flows for the year ended December 31, 2021, and the related notes (collectively referred to as the consolidated financial statements). In our opinion, the consolidated

 financial statements present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2021, and the consolidated results of its operations and its cash flows for the year ended
 December 31, 2021, in conformity with accounting principles generally accepted in the United States of America.

 Basis for Opinion

 These consolidated financial statements are the responsibility of the Company's management. Our responsibility is
 to express an opinion on the Company's consolidated financial statements based on our audits. We are a public
 accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the
 applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 We
 conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

 Our audits
 included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures to respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and
 significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable
 basis for our opinion.

 /s/ Moss Adams LLP

 Sacramento, California

 March 16, 2022

 We have served as the Company's auditor from 2013 through 2022.

 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

 (Dollars in thousands, except share and per share amounts)

 2023

 2022

 ASSETS

 Cash and due from banks

 $

 72,267

 $

 73,358

 Interest bearing deposits with banks

 338,375

 514,899

 Total cash and cash equivalents

 Securities available-for-sale, amortized cost $ 199,374 and $ 183,171, respectively

 152,864

 Securities held-to-maturity, fair value $ 671,585 and $ 688,393, respectively

 845,346

 Allowance for credit losses - securities held-to-maturity

 ( 450

)

 ( 393

)

 Total investment securities

 999,750

 997,817

 Loans and leases held-for-investment, net of unearned income

 Allowance for credit losses - loans and leases

 ( 74,965

)

 ( 66,885

)

 Loans held for investment, net

 3,579,724

 3,445,476

 Bank-owned life insurance

 74,931

 73,038

 Premises and equipment, net

 51,907

 49,476

 Deferred income tax assets

 39,979

 31,507

 Accrued interest receivable

 28,520

 21,602

 Goodwill

 11,183

 11,183

 Other intangibles

 2,236

 2,809

 Other real estate owned

 Other assets

 93,634

 89,812

 Total Assets

 $

 5,308,928

 $

 5,327,399

 LIABILITIES AND SHAREHOLDERS' EQUITY

 Deposits:

 Non-interest bearing

 $

 1,482,571

 $

 1,758,793

 Interest bearing:

 Demand

 933,417

 1,125,014

 Savings and money market

 1,607,479

 1,544,062

 Certificates of deposit

 644,628

 331,400

 Total interest bearing

 3,185,524

 3,000,476

 4,668,095

 4,759,269

 Interest payable and other liabilities

 80,768

 72,512

 Total Liabilities

 4,759,173

 4,842,091

 SHAREHOLDERS' EQUITY

 Preferred shares, no par value, 1,000,000 shares authorized and, no ne issued or outstanding

 -

 -

 Common shares, $ 0.01 par value, 7,500,000 authorized, 747,971 and 768,337
 issued and outstanding at December 31, 2023 and 2022, respectively

 Additional paid-in capital

 36,852

 57,206

 Retained earnings

 525,360

 449,932

 Accumulated other comprehensive income/(loss), net of taxes

 ( 12,464

)

 ( 21,838

)

 TOTAL SHAREHOLDERS' EQUITY

 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

 $

 5,308,928

 $

 5,327,399

 Consolidated Statements of Income

 (Dollars in thousands, except share and per share amounts)

 2023

 2022

 2021

 Interest income

 Interest and fees on loans and leases

 $

 204,482

 $

 164,022

 $

 147,208

 Interest and dividends on investment securities

 22,400

 22,289

 17,158

 Interest on deposits with others

 26,872

 12,102

 Total interest income

 253,754

 198,413

 165,268

 Interest expense

 Deposits

 37,523

 4,349

 4,017

 Total interest expense

 4,840

 4,332

 160,936

 9,407

 6,450

 1,910

 Net interest income after provision for credit losses

 205,978

 187,123

 159,026

 Non-interest income

 Card processing

 6,686

 7,123

 6,959

 Gain on BOLI death benefit

 4,346

 -

 -

 Net gain on deferred compensation benefits

 2,974

 2,614

 Service charges on deposit accounts

 2,755

 2,794

 2,972

 Increase in cash surrender value of BOLI

 2,027

 2,233

 2,175

 Net (loss)/gain on sale of securities available-for-sale

 ( 8,199

)

 ( 10,689

)

 2,554

 Other

 4,325

 4,266

 3,782

 Total non-interest income

 6,178

 21,056

 Non-interest expense

 Salaries and employee benefits

 70,883

 64,250

 63,860

 Data Processing

 5,293

 4,968

 4,967

 Occupancy

 4,837

 4,717

 4,675

 Net gain on deferred compensation benefits

 2,974

 2,614

 Deposit insurance

 2,769

 1,771

 1,498

 Professional services

 2,334

 2,459

 1,355

 Marketing

 1,885

 1,324

 1,097

 Other

 13,364

 13,620

 11,695

 Total non-interest expense

 91,761

 INCOME BEFORE INCOME TAXES

 116,553

 99,741

 88,321

 Income tax expense

 21,985

 NET INCOME

 $

 $

 $

 Earnings per common share:

 Basic

 $

 116.61

 $

 96.55

 $

 84.01

 Diluted

 $

 116.61

 $

 96.55

 $

 84.01

 Weighted average number of common shares

 Basic

 757,336

 777,726

 Diluted

 757,336

 777,726

 Consolidated Statements of Comprehensive Income

 2023

 2022

 2021

 $

 $

 $

 Other comprehensive income

 Unrealized gains/(losses) on available-for-sale securities

 5,246

 ( 39,015

)

 ( 17,986

)

 Reclassification adjustment for losses/(gains) on available-for-sale securities

 8,199

 10,689

 ( 2,554

)

 Amortization of unrealized loss on securities transferred to held-to-maturity

 ( 136

)

 ( 238

)

 ( 457

)

 Net unrealized gains/(losses) on available-for-sale securities

 13,309

 ( 28,564

)

 ( 20,997

)

 Income tax (expense)/benefit

 ( 3,935

)

 8,445

 6,207

 Other comprehensive income/(loss), net of tax

 9,374

 ( 20,119

)

 ( 14,790

)

 Total comprehensive income

 $

 97,688

 $

 54,971

 $

 51,546

 Consolidated Statements of Changes in Shareholders' Equity

 (Dollars in thousands, except share and per share amounts)

 Common

 Shares

 Additional

 Paid-In

 Capital

 Retained

 Earnings

 Accumulated

 Other

 Comprehensive

 (Loss)/Income

 Total

 Balance as of January 1, 2021

 $

 $

 77,516

 $

 333,070

 $

 13,071

 $

 423,665

 -

 -

 -

 -

 Other comprehensive loss, net of tax

 -

 -

 -

 -

 ( 14,790

)

 ( 14,790

)

 Cash dividends declared ($ 15.30
 per share)

 -

 -

 -

)

 -

)

 Balance as of December 31, 2021

 $

 $

 77,516

 $

 387,331

 $

 ( 1,719

)

 $

 463,136

 -

 -

 -

 -

 Other comprehensive loss, net of tax

 -

 -

 -

 -

 ( 20,119

)

 ( 20,119

)

 Cash dividends declared ($ 16.15
 per share)

 -

 -

 -

 ( 12,489

)

 -

 ( 12,489

)

 Repurchase of common stock

 ( 21,309

)

 -

 ( 20,310

)

 -

 -

 ( 20,310

)

 Balance as of December 31, 2022

 768,337

 $

 $

 57,206

 $

 449,932

 $

 ( 21,838

)

 $

 -

 -

 -

 -

 Other comprehensive income, net of tax

 -

 -

 -

 -

 9,374

 9,374

 Cash dividends declared ($ 17.10
 per share)

 -

 -

 -

 ( 12,886

)

 -

 ( 12,886

)

 Repurchase of common stock

 ( 20,366

)

 ( 1

)

 ( 20,354

)

 -

 -

 ( 20,355

)

 Balance as of December 31, 2023

 747,971

 $

 $

 36,852

 $

 525,360

 $

 ( 12,464

)

 $

 Consolidated Statements of Cash Flows

 2023

 2022

 2021

 Cash flows from operating activities:

 $

 $

 $

 Adjustments to reconcile net income to net cash provided by operating activities:

 9,407

 6,450

 1,910

 Depreciation and amortization

 2,491

 2,428

 2,632

 Net amortization of securities premiums and discounts

 ( 109

)

 1,446

 Increase in cash surrender value of BOLI

 ( 2,027

)

 ( 2,233

)

 ( 2,175

)

 Gain on BOLI death benefit

 ( 4,346

)

 -

 -

 (Increase)/decrease in deferred income taxes, net

 ( 5,603

)

 4,330

 ( 880

)

 Losses/(gains) on sale of securities available-for-sale

 8,199

 10,689

 ( 2,554

)

 Net changes in:

 Other assets

 ( 16,792

)

 ( 8,262

)

 ( 12,432

)

 Other liabilities

 13,814

 12,910

 5,680

 Net cash provided by operating activities

 93,348

 101,778

 59,963

 Cash flows from investing activities:

 Net change in loans and leases held-for-investment

 ( 156,433

)

 ( 275,061

)

 ( 137,216

)

 Purchase of available-for-sale securities

 ( 84,114

)

 ( 10,217

)

 ( 257,231

)

 Purchase of held-to-maturity securities

 ( 6,850

)

 ( 173,907

)

 ( 395,176

)

 Purchase of non-marketable securities

 -

 -

 ( 2,856

)

 Proceeds from sales, maturities, calls and pay downs of available-for-sale securities

 59,557

 88,504

 458,855

 Proceeds from maturities, calls and pay downs of held-to-maturity securities

 49,063

 65,493

 43,287

 Purchase of bank-owned life insurance

 ( 7,271

)

 -

 -

 Purchase of premises and equipment

 ( 4,972

)

 ( 4,190

)

 ( 2,069

)

 Purchase of other investments

 ( 7,306

)

 ( 6,600

)

 ( 8,192

)

 Redemption of other investments

 -

 -

 2,752

 Proceeds from bank-owned life insurance

 11,751

 -

 Proceeds from sale of assets

 1,696

 Net cash used in investing activities

 ( 146,548

)

 ( 315,299

)

 ( 296,150

)

 Cash flows from financing activities:

 Net (decrease)/increase in deposits

 ( 91,174

)

 119,117

 579,885

 Cash dividends paid

 ( 12,886

)

 ( 12,489

)

)

 Net cash used in share repurchase of common stock

 ( 20,355

)

 ( 20,310

)

 -

 Net cash used in/provided by financing activities

 ( 124,415

)

 86,318

 567,810

 Net change in cash and cash equivalents

 ( 177,615

)

 ( 127,203

)

 331,623

 Cash and cash equivalents, beginning of year

 715,460

 383,837

 Cash and cash equivalents, end of year

 $

 $

 $

 715,460

 Supplemental disclosures of cash flow information:

 Cash paid for interest

 $

 29,280

 $

 5,785

 $

 4,369

 Income taxes paid

 $

 12,662

 $

 12,469

 $

 29,941

 Supplemental disclosures of non-cash transactions:

 Investment securities available-for-sale transferred to held-to-maturity

 $

 -

 $

 -

 $

 316,925

 Net change in unrealized gains/(losses) on securities available-for-sale

 $

 ( 13,445

)

 $

 28,326

 $

 20,540

 Lease liabilities arising from obtaining right-of-use assets

 $

 -

 $

 -

 $

 Note 1—Summary of
 Significant Accounting Policies

 Nature of Operations and basis of consolidation — Farmers & Merchants Bancorp ("FMCB") is a Delaware corporation headquartered in Lodi, California and is the bank holding company for Farmers & Merchants Bank of Central California (the "Bank" or
 "F&M Bank" and together with FMCB, the "Company"). The Company operates all business activities through the Bank, which was organized in 1916. F&M Bank is a California state-chartered bank. F&M Bank operates under the supervision
 of the California Department of Financial Protection and Innovation ("DFPI"), and its deposits are insured by the Federal Deposit Insurance Corporation ("FDIC"). F&M Bank is not a member of the Federal Reserve System; however, FMCB operates
 as a bank holding company under the Federal Bank Holding Company Act of 1956, subject to and under the supervision of and examination by the Federal Reserve and is the sole shareholder of F&M Bank. Both FMCB and F&M Bank are subject to
 periodic examination by these applicable federal and state regulatory agencies and file periodic reports and other information with the agencies. The Company considers F&M Bank to be its sole operating segment.

 The Company's other wholly-owned subsidiaries include F & M Bancorp, Inc. and FMCB Statutory Trust I. F & M Bancorp, Inc. was created in March 2002 to protect the name F
 & M Bank. During 2002, the Company completed a fictitious name filing in California to begin using the streamlined name "F & M Bank" as part of a larger effort to enhance the Company's image and build brand name recognition. In December
 2003, the Company formed a wholly owned subsidiary, FMCB Statutory Trust I, for the sole purpose of issuing Trust Preferred Securities and related subordinated debentures. In accordance with generally accepted accounting principles in the United
 States ("GAAP"), FMCB Statutory Trust I is a non-consolidated subsidiary.

 Through its network of 29 banking offices and 3 free-standing ATMs, F&M Bank emphasizes personalized service along with a broad range of banking services to businesses and individuals located in
 the service areas of its offices. Although the Company focuses on marketing its services to small and medium-sized businesses, a broad range of retail banking services are also made available to the local consumer market. F&M Bank branches are
 located through the mid Central Valley of California, including Sacramento, San Joaquin, Solano, Stanislaus and Merced counties and the east region of the San Francisco Bay Area including Napa, Alameda and Contra Costa counties.

 F&M Bank provides a broad complement of lending products, including commercial, commercial real estate, real estate construction, agribusiness, consumer, credit card,
 residential real estate loans, and equipment leases. Commercial products include term loans, leases, lines of credit and other working capital financing and letters of credit. Financing products for individuals include automobile financing, lines
 of credit, residential real estate, home improvement and home equity lines of credit.

 F&M Bank also offers a wide range of deposit products. These include checking, savings, money market, time certificates of deposit, individual retirement accounts and online
 banking services for both business and personal accounts.

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

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

 The consolidated financial statements of the Company include the accounts of FMCB together with the Bank. All intercompany transactions and balances have been eliminated.

 Use of estimates — The preparation of consolidated
 financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP") requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of
 assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported period. Actual results could differ from those estimates.
 Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for credit losses ("ACL"), the determination of the fair value of certain financial instruments, and deferred
 income tax assets.

 Reclassifications — Certain amounts in the prior
 years' financial statements have been reclassified to conform to the current year's presentation. There was no impact on net income or retained earnings as a result of any reclassification.

 Cash and cash equivalents — Cash and cash
 equivalents consist of cash on hand, amounts due from banks, interest bearing deposits, and federal funds sold, all of which have original maturities of three months or less. The Company places its cash with high credit quality institutions. The
 amounts on deposit fluctuate and, at times, exceed the insured limit by the FDIC, which potentially subjects the Company to credit risk. For these instruments, the carrying amount is a reasonable estimate of fair value.

 Statement of cash flows — For purposes of presentation on the
 consolidated statements of cash flows, "cash and cash equivalents" are defined as those amounts included in "Cash and cash equivalents" on the consolidated balance sheets.

 Investment securities — Investment securities are classified as
 held-to-maturity ("HTM") when the Company has the positive intent and ability to hold the securities to maturity. Investment securities are classified as available-for-sale ("AFS") when the Company has the intent of holding the security for an
 indefinite period of time, but not necessarily to maturity. The Company determines the appropriate classification at the time of purchase, and periodically thereafter. Investment securities classified at HTM are carried at amortized cost.
 Investment securities classified at AFS are reported at fair value. Purchase premiums and discounts are recognized in interest income using the interest method over the terms of the securities. Debt securities classified as HTM are carried at
 cost, net of the allowance for credit losses – securities, adjusted for amortization of premiums and discounts to the earliest callable date. Debt securities classified as AFS are measured at fair value. Unrealized holding gains and losses on
 debt securities classified as AFS are excluded from earnings and are reported net of tax as accumulated other comprehensive income (or loss) ("AOCI"), a component of shareholders' equity, until realized. When AFS securities, specifically
 identified, are sold, the unrealized gain or loss is reclassified from AOCI to non-interest income.

 Allowance for Credit Losses – Securities — Management measures expected credit losses on held-to- maturity debt securities on a collective basis by major security type. The Company's HTM portfolio
 contains securities issued by U.S. government entities and agencies and municipalities. The Company uses industry historical credit loss information adjusted for current conditions to establish the allowance for credit losses on its HTM municipal
 bond portfolio. Further information regarding our policies and methodology used to estimate the allowance for credit losses on HTM securities is presented in Note 2 – Investment Securities.

 For AFS investment securities in an unrealized loss position, the Company first assesses whether it intends to sell, or is more likely than not that it will be required to sell
 the security before recovery of its amortized cost basis. If the Company intends to sell the security or it is more likely than not that, the Company will be required to sell the security before recovering its cost basis, the entire impairment loss
 would be recognized in earnings. If the Company does not intend to sell the security and it is not more likely than not that, the Company will be required to sell the security, the Company evaluates whether the decline in fair value has resulted
 from credit losses or other factors. In making this assessment, management considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency, and adverse conditions specifically
 related to the security, among other factors. If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security. Projected
 cash flows are discounted by the current effective interest rate. If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses is recorded for the credit
 loss, limited by the amount that the fair value is less than the amortized cost basis. The remaining impairment related to all other factors, the difference between the present value of the cash flows expected to be collected and fair value, is
 recognized as a charge to AOCI.

 Changes in the allowance for credit losses-securities are recorded as provision for (or reversal of) credit losses. Losses are charged against the allowance when management
 believes the non-collectability of an AFS security is confirmed or when either criteria regarding intent of requirement to sell is met.

 Interest on loans is accrued based upon the principal amount
 outstanding. The Company has elected the practical expedient to exclude all accrued interest receivable from all required disclosures of amortized cost. Additionally, an election was made not to measure an allowance for credit losses for accrued
 interest receivables. The Company has also made the election that all interest accrued but ultimately not received is reversed against interest income.

 Non-marketable equity securities — Non-marketable
 equity securities primarily consist of Federal Home Loan Bank ("FHLB") stock. FHLB stock is restricted because such stock may only be sold to the FHLB at its par value. Due to the restrictive terms, and the lack of a readily determinable market
 value, FHLB stock is carried at cost. The investments in FHLB stock are required investments related to the Bank's borrowings from FHLB. FHLB obtains its funding primarily through issuance of consolidated obligations of the FHLB system. The U.S.
 government does not guarantee these obligations, and each of the regional FHLBs are jointly and severally liable for repayment of each other's debt.

 Loans and leases held for investment — Loans that
 management has the intent and ability to hold for the foreseeable future or until maturity or pay-off are reported at their outstanding principal balance adjusted for any charge-offs, the allowance for loan losses, any deferred fees or costs on
 originated loans and unamortized premiums or discounts on acquired loans. Interest income is accrued on the unpaid principal balance. Loan origination fees, net of certain direct origination costs, are deferred and recognized as an adjustment of
 the related loan yield using the effective interest method.

 Non-Accrual Loans and Leases - Accrual of interest
 on loans and leases is generally discontinued when a loan or lease becomes contractually past due by 90 days or more with respect to
 interest or principal. When loans and leases are 90 days past due, but in management's judgment are well secured and in the process of
 collection, they may not be classified as non-accrual. When a loan or lease is placed on non-accrual status, all interest previously accrued but not collected is reversed. Income on such loans and leases is then recognized only to the extent that
 cash is received and where the future collection of principal is probable.

 On January 1, 2023, the Company adopted ASU 2022-02, Financial Instruments – Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage
 Disclosures using the prospective transition method. This ASU eliminates the troubled debt restructuring recognition and measurement guidance and requires an entity to present gross write-offs by year of origination. The amendments also
 enhance disclosure requirements related to certain modifications of receivables made to borrowers experiencing financial difficulty. With the exception of enhanced disclosures, there was no material impact to the consolidated financial statements
 from adoption of this ASU. The Company's updated accounting policy, as a result of this new ASU, is outlined below.

 Modifications for Borrowers Experiencing Financial Difficulty. The Company may renegotiate the terms of existing loans for a variety of
 reasons. When refinancing or restructuring a loan, the Company evaluates where the borrower is experiencing financial difficulty. In making this determination, the Company considers whether the borrower is currently in default on any of its debt.
 In addition, the Company evaluates whether it is probable that the borrower would be in payment default on any of its debt in the foreseeable future without the modification and if the borrower (without the current modification) could obtain
 equivalent financing from another creditor at a market rate for similar debt. Modifications of loans to borrowers in these situations may indicate that the borrower is facing financial difficulty. Modifications of loans to borrowers experiencing
 financial difficulty that are in the form of principal forgiveness, interest rate reductions, other-than-insignificant payment delays, or a term extension (or a combination thereof) require disclosure. The Company's disclosures are included in Note
 4 - Loans and Leases.

 Allowance for Credit
 Losses — Loans — On January 1, 2022, the Company adopted
 ASU 2016-13, Financial Instruments - Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments, as amended, which replaced the incurred loss methodology that delays recognition
 until it is probable a loss has been incurred with an expected loss methodology that is referred to as CECL. Both the FASB Staff Q&A Topic 326, No. 1 and the federal financial institution regulatory agencies ("Financial Institution Letter
 FIL-17-2019"), along with the Securities and Exchange Commission, have confirmed that smaller, less complex organizations are not required to implement complex models, developed by outside vendors to calculate current expected credit losses.
 Accordingly, in adopting ASU 2016-13 (Topic 326) Management determined that the Weighted Average Remaining Maturity ("WARM") methodology was most appropriate given the Company's current size and complexity.

 The methodology for determining the allowance for credit losses ("ACL") on loans is considered a critical accounting policy by management because of the high degree of judgment
 involved. The subjectivity of the assumptions used and the potential for changes in the economic environment could result in changes to the amount of the recorded ACL. Among the material estimates required to establish the ACL are: (i) a weighted
 average loss estimate categorized by loan segmentation; (ii) average duration calculations in order to assess the loss factors over the life of the loan segment; (iii) an economic report to assess macro and micro-economic factors influencing loss
 potential; (iv) value of collateral and strength of guarantors; (v) the amount and timing of future cash flows for loans individually evaluated; and (vi) the determination of the qualitative loss factors. All of these estimates are susceptible to
 significant change.

 The Company's methodology is set forth in a formal policy and takes into consideration the need for a valuation allowance for loans evaluated on a collective (pool) basis, which
 have similar risk characteristics as well as allowances to individual loans that do not share similar risk characteristics.

 The ACL is a valuation account that is deducted from the amortized cost basis of loans to present the net amount expected to be collected on the loans. The provision for credit
 losses reflects the amount required to maintain the ACL at an appropriate level based upon management's evaluation of the adequacy of the current expected credit losses. The Company increases its ACL by charging provisions for credit losses on
 its consolidated statement of income. Losses related to specific assets are applied as a reduction of the carrying value of the assets and charged against the ACL when management believes a loan balance is uncollectable. Recoveries on previously
 charged off loans are credited to the ACL.

 Management estimates the ACL using relevant available information, from internal and external sources, relating to past events, current conditions, and economic forecasts.
 Historical credit loss experience, either internal or peer information, provides the basis for the estimation of expected credit losses. Adjustments to historical loss information are made, using qualitative factors, when management expects
 current conditions and economic forecasts to differ from the conditions that existed for the period over which historical information was evaluated. The ACL is maintained at a level sufficient to provide for expected credit losses over the life
 of the loan based on evaluating historical credit loss experience and making adjustments to historical loss information for differences in the specific risk characteristics in the current loan portfolio. These factors include, among others,
 changes in the size and composition of the loan portfolio, differences in underwriting standards, delinquency rates, actual loss experience and current economic conditions.

 Management incorporates reasonable and supportable information in order to calculate the ACL. This includes the ability to reliably forecast and document exogenous events that
 may affect the credit performance of the Company's loan portfolio. Management is confident in its ability to effectively identify historical loss information by the appropriate portfolio segmentation. In addition, management believes that it can
 reasonably obtain historical loss information by its respective peers to further improve historical loss information. Due to a growth cycle that has expanded the Company's geographical service area and product mix as it has expanded into the San
 Francisco Bay Area, the Company's peer group has been determined to better align with the Company's loss profile for loans tied to the commercial real estate, commercial, industrial, real estate, and consumer segments. However, given the low
 concentration in agricultural industry related loans in the peer group, the Company's own loss history in agricultural loans is more suitable. Additionally, the Company believes that it can effectively evaluate the potential impact that both
 macro and micro-economic conditions can have on its loan portfolio. Management is also comfortable that it can rely on weighted average maturity calculations, including estimated prepayments with its existing third party Asset/Liability
 Management ("ALM") applications.

 Management utilizes the seventeen loan segments used in
 preparing regulatory Call Reports to segment its portfolio and to extract the relevant information needed to calculate its ACL. This allows management the ability to obtain historical loss information for itself as well as its peer group.
 Additionally, management's ALM application also utilizes a similar loan segmentation in calculating weighted average remaining terms.

 Table

 The foundation of CECL modeling is the ability to estimate expected credit losses over the lifetime of a loan. Management must use relevant available information about past events (e.g. historical losses)
 current conditions, and economic forecasts about future conditions. Historical annual loss rates serve as the starting point to estimate expected credit losses.

 Management uses a
 "through-the-cycle" historical credit loss experience as its baseline for historical credit losses and has determined a representative period for a full credit cycle would be from 2009 to 2023 ( fifteen-year credit cycle). Management has collected historical loss information on its own loan portfolio as well as peer group information by the seventeen loan segments over this time horizon using information available from the Federal regulators on the Uniform Bank Performance Report ("UBPR").

 Federal regulators have placed the Company into a peer group of banks with assets between $ 3 billion to $ 10 billion. This peer group segmentation includes 209 banks across the nation. The model calculates the mean historical loss rate over the 15 -year economic cycle for both the Bank and its peer group. The model calculates the stressed historical loss rate over the 15-year economic cycle for both the Bank and its peer group.

 Management evaluates macro and
 micro-economic information as well as internal trends in credit performance on the Company's loan portfolio to determine where they believe it is in an economic credit cycle. Depending upon estimations of what point in the credit cycle the current
 economy may exist, management adjusts, on a quantitative basis, historical loss rates either upwards or downwards from the mean. If management believes we are nearing the end on a credit cycle, the Company may adjust historical losses in increments
 higher from the mean. If the Company believes that we are in the recovery stage of a credit cycle, it may adjust historical losses downwards from the mean. Management understands that historical credit losses may not exactly follow a normal
 bell-shaped curve, but that the approach provides consistency across all loan segments as well as a measured probability of credit loss coverage.

 Management used the duration of each loan segment to estimate the remaining life of loans to ensure that the model covers credit losses over the expected life of such loans.

 Management employs the use of qualitative factors as defined by the Interagency Policy Statement on Allowance for Credit Losses ("SR 20-12"). Management considers qualitative or
 environmental factors that are likely to cause estimated credit losses associated with our existing portfolio to differ from historical loss experience, as defined in the Interagency guidance, including but not limited to:

 Changes in lending policies and procedures, including changes in underwriting standards and collection, charge-off, and recovery practices not considered elsewhere in estimating credit losses.

 Changes in international, national, regional, and local economic and business conditions and developments that affect the collectability of the portfolio, including the condition of various market segments.

 Changes in the nature and volume of the portfolio and in the terms of loans.

 Changes in the experience, ability, and depth of lending management and other relevant staff.

 Changes in the volume and severity of past due loans, the volume of non-accrual loans, and the volume and severity of adversely classified or graded loans.

 Changes in the quality of the institution's loan review system.

 Changes in the value of underlying collateral for collateral-dependent loans.

 The existence and effect of any concentrations of credit, and changes in the level of such concentrations.

 The effect of other external factors such as competition and legal and regulatory requirements on the level of estimated credit losses in the institution's existing portfolio.

 These qualitative factors are applied primarily to our agriculture and agricultural real estate loan exposure.

 Fair value estimates — We measure some of our assets and liabilities on a fair value basis. Fair value is the price that would be
 received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. To increase consistency and comparability in fair value measurements, we prioritize valuation inputs in accordance with a
 three- level hierarchy. We prioritize quoted prices in active markets and minimize reliance on unobservable inputs when possible. When observable market prices are not available, fair value is estimated using modeling techniques requiring
 professional judgment to estimate the appropriate fair value. We believe we use assumptions that market participants would consider in pricing the asset or the liability. Changes in market conditions may reduce the availability of quoted prices
 or observable data. See Note 11 for further information regarding the use of fair value estimates.

 Premises and equipment — Land is carried at cost.
 Premises and equipment are carried at cost, net of accumulated depreciation and amortization. Depreciation and amortization expense is computed using the straight-line method based on the estimated useful lives of the related assets below:

 Building and building improvements

 30 to 40 years

 Leasehold improvements

 term of lease

 Furniture and equipment

 3 to 7 years

 Computers, software and equipment

 3 to 7 years

 Maintenance and repairs are expensed as incurred while major additions and improvements are capitalized.

 Bank-owned life insurance ("BOLI") — The Bank has purchased life insurance policies. These policies provide protection against the adverse financial effects that could result from the death of a key employee and
 provide tax-exempt income to offset expenses associated with certain employee benefit plans. It is the Bank's intent to hold these policies as a long-term investment; however, there may be an income tax impact if the Bank chooses to surrender
 certain policies. Although the lives of individual current or former management-level employees are insured, the Bank is the owner and sole or partial beneficiary. BOLI is carried at the cash surrender value ("CSV") of the underlying insurance
 contract. Changes in the CSV and any death benefits received in excess of the CSV are recognized as non-interest income.

 Goodwill — Goodwill represents the excess of the
 purchase considerations paid over the fair value of the assets acquired, net of the fair values of liabilities assumed in a business combination and is not amortized but is reviewed annually as of December 31, or more frequently as current
 circumstances and conditions warrant, for impairment. An assessment of qualitative factors is completed to determine if it is more likely than not that, the fair value of a reporting unit is less than its carrying amount. If the qualitative
 analysis concludes that further analysis is required, then a quantitative impairment test would be completed. The quantitative goodwill impairment compares the reporting unit's estimated fair values, including goodwill, to its carrying amount. If
 the carrying amount exceeds its reporting unit's fair value, then an impairment loss would be recognized as a charge to earnings but is limited by the amount of goodwill allocated to that reporting unit.

 Other intangible assets — Other intangible assets
 consist primarily of core deposit intangibles ("CDI"), which are amounts recorded in business combinations or deposit purchase transactions related to the value of transaction-related deposits and the value of the client relationships associated
 with the deposits. Core deposit intangibles are amortized over the estimated useful lives of such deposits. These assets are reviewed at least annually for events or circumstances that could affect their recoverability. These events could include
 loss of the underlying core deposits, increased competition or adverse changes in the economy. The amortization of our CDI is recorded in other non-interest expense. To the extent other identifiable intangible assets are deemed unrecoverable;
 impairment losses are recorded in other non-interest expense to reduce the carrying amount of the assets.

 Transfers of financial assets — Transfers of
 financial assets are accounted for as sales when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Company, (2) the transferee obtains the
 right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and (3) the Company does not maintain effective control over the transferred assets through an agreement to repurchase
 them before their maturity.

 Right of use lease asset & lease liability — Accounting Standards Codification ("ASC") 842, Leases ("ASC 842"), establishes a right of use model that requires a lessee to record a right of
 use asset and a lease liability for all leases with terms longer than 12 months. We record an operating lease right of use ("ROU") asset and an operating lease liability (lease liability) for operating leases with a lease term greater than 12
 months. The ROU asset and lease liability are recorded in other assets and other liabilities, respectively, in the consolidated statements of financial condition. ROU assets represent our right to use an underlying asset for the lease term and
 lease liabilities represent our obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at commencement date based on the present value of lease payments over the lease term. Accordingly, ROU
 assets are reduced by tenant improvement allowances from property owners plus any prepaid rent. We do not separate lease and non-lease components of contracts. As most of our leases do not provide an implicit rate, we generally use our
 incremental borrowing rate based on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments at commencement date.

 The Company leases retail space and office space under operating leases. Most leases require the Company to pay real estate taxes, maintenance, insurance and other similar costs
 in addition to the base rent. Certain leases also contain lease incentives, such as tenant improvement allowances and rent abatement. Variable lease payments are recognized as lease expense as they are incurred.

 Many of our leases contain various provisions for increases in rental rates, based either on changes in the published Consumer Price Index or a predetermined escalation schedule,
 which are factored into our determination of lease payments when appropriate. A majority of the leases provide the Company with the option to extend the lease term one or more times following expiration of the initial term. The ROU asset and lease
 liability terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term.

 Off-balance sheet credit related financial instruments — In the ordinary course of business, the Company has entered into commitments to extend credit, including commitments under credit card arrangements, commercial letters of credit, and standby letters of credit. Such financial instruments
 are recorded when they are funded.

 Allowance for credit losses - unfunded loan commitments — An allowance for credit losses - unfunded loan commitments is maintained at a level that, in the opinion of management, is adequate to absorb current expected credit losses associated with the contractual life of the Banks' commitments
 to lend funds under existing agreements such as letters or lines of credit. The Bank uses a methodology for determining the allowance for credit losses - unfunded loan commitments that applies the same loan segmentation and loss rate to each pool
 as the funded exposure adjusted for probability of funding. Draws on unfunded loan commitments that are considered uncollectible at the time funds are advanced are charged to the allowance for credit losses on off-balance sheet exposures.
 Provisions for credit losses - unfunded loan commitments are recognized in the provision for credit losses, and added to the allowance for credit losses - unfunded loan commitments, which is included in other liabilities in the consolidated
 statements of financial condition. In 2022, the provision for credit-losses – unfunded loan commitments was recognized in non-interest expense.

 Revenue from contracts with customers — The Company records revenue from contracts with customers in accordance with ASC Topic 606, "Revenue
 from Contracts with Customers" ("Topic 606"). Under Topic 606, the Company must identify the contract with a customer, identify the performance obligations in the contract, determine the transaction price, allocate the transaction price
 to the performance obligations in the contract, and recognize revenue when (or as) the Company satisfies a performance obligation. Significant revenue has not been recognized in the current reporting period that results from performance
 obligations satisfied in previous periods.

 The Company's primary sources of revenue are derived from interest and dividends earned on loans, investment securities, and other financial instruments that
 are not within the scope of Topic 606. The Company has evaluated the nature of its contracts with customers and determined that further disaggregation of revenue from contracts with customers into more granular categories beyond what is presented
 in the Consolidated Statements of Income is not necessary. The Company generally fully satisfies its performance obligations on its contracts with customers as services are rendered and the transaction prices are typically fixed; charged either on
 a periodic basis or based on activity. Because performance obligations are satisfied as services are rendered and the transaction prices are fixed, there is limited judgment involved in applying Topic 606 that significantly affects the
 determination of the amount and timing of revenue from contracts with customers.

 Income taxes — Deferred income tax assets and deferred income tax
 liabilities represent the tax effect of temporary differences between financial reporting and tax reporting measured at enacted tax rates in effect for the year in which the differences are expected to reverse. The Company recognizes only the
 impact of tax positions that, based on their technical merits, are more likely than not to be sustained upon an audit by the taxing authority.

 Developing the provision for income taxes, including the effective tax rate and analysis of potential tax exposure items, if any, requires significant judgment and expertise in
 federal and state income tax laws, regulations and strategies, including the determination of deferred income tax assets and liabilities and any estimated valuation allowances deemed necessary to value deferred income tax assets. Judgments and tax
 strategies are subject to audit by various taxing authorities. While the Company believes it has no significant uncertain income tax positions in the consolidated financial statements, adverse determinations by these taxing authorities could have a
 material adverse effect on the consolidated financial positions, result of operations, or cash flows.

 Basic and diluted earnings per common share — Basic earnings per common share amounts are computed by dividing net income by the weighted average number of common shares outstanding for the
 period. There are no common stock equivalent shares. Therefore, there is no difference between presentation of diluted and basic
 earnings per common share.

 Comprehensive income — Other comprehensive income refers to revenues, expenses, gains, and losses that U.S. GAAP recognize as changes in value to an enterprise but are excluded from net income. For
 the Company, comprehensive income includes net income and changes in fair value of its available-for-sale investment securities and amortization of net unrealized gains or losses on securities transferred from available-for-sale to
 held-to-maturity, net of related taxes.

 Segment reporting — The Company is a holding company for a community bank, which offers a wide array of products and services to its customers. Pursuant to its banking strategy, emphasis is placed
 on building relationships with its customers, as opposed to building specific lines of business. The Company is not organized around discernible lines of business, but rather operates as an integrated unit to customize solutions for its customers
 with business line emphasis and product offerings changing over time as customer needs and demands change. As a result, the Company has only one
 operating segment.

 Loss contingencies — Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the likelihood of loss is probable and an
 amount or range of loss can be reasonably estimated. Management does not believe there are any such loss contingencies that will have a material and adverse effect on the consolidated financial statements.

 Subsequent events
 — We evaluated events that occurred between December 31, 2023 and the date the accompanying financial statements were issued, and determined that there were no material events that would require adjustments to our consolidated financial statements
 or significant disclosure in the accompanying Notes.

 Accounting Standards Pending Adoption — The
 Accounting Standards Codification ("ASC") is the FASB officially recognized source of authoritative GAAP applicable to all public and non-public non-governmental entities. Periodically, the FASB will issue Accounting Standard Updates ("ASU") to
 its ASC. Rules and interpretive releases of the SEC under the authority of the federal securities laws are also sources of authoritative GAAP for the Company as an SEC registrant. All other accounting literature is non-authoritative. The
 following paragraphs provide descriptions of newly issued but not yet effective accounting standards that could have a material effect on the Company's financial position or results of operations.

 In June 2022, the Financial Accounting Standards Board ("FASB") issued guidance within ASU 2022-03, Fair Value Measurement of Equity Securities
 Subject to Contractual Sale Restrictions. The amendments in this ASU affect all entities that have investments in equity securities measured at fair value that are subject to a contractual sale restriction. These amendments clarify that a
 contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value. The amendments in this ASU are effective for fiscal years,
 beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted for both interim and annual financial statements that have not yet been issued or made available for issuance. The company adopted
 this standard on January 1, 2024, with no material impact on the Company's Consolidated Financial Statements.

 In March 2023, the FASB issued ASU 2023-02, Investments – Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit
 Structures Using the Proportional Amortization Method. ASU 2023-02 allows reporting entities to elect to account for qualifying tax equity investments using the proportional amortization method, regardless of the program giving rise to the
 related income tax credits. The Amendments in ASU 2023-02 apply to all reporting entities that hold (1) tax equity investments that meet the conditions for and elect to account for them using the proportional amortization method or (2) an
 investment in a low income housing tax credit investments ("LIHTC") structure through a limited liability entity that is not accounted for using the proportional amortization method and to which certain LIHTC-specific guidance removed from FASB ASC
 323-740, Investments – Equity Method and Joint Ventures: Income Taxes, has been applied. ASU 2023-02 is effective for fiscal years beginning after December 15, 2023, including interim periods within those
 fiscal years. Early adoption is permitted for any interim period within those fiscal years. The amendments in ASU 2023-02 must be applied on either a modified retrospective or a retrospective basis (except as discussed in the ASU for LIHTC
 investments not accounted for using the proportional amortization method). The Company adopted this standard to use the proportional amortization method on January 1, 2024, with no material impact on the Company's Consolidated Financial Statements.

 In July 2023, the FASB issued ASU 2023-03, Presentation of Financial Statements (Topic 205), Income Statement—Reporting
 Comprehensive Income (Topic 220), Distinguishing Liabilities from Equity (Topic 480), Equity (Topic 505), and Compensation—Stock Compensation (Topic 718). This ASU amends the FASB Accounting Standards Codification for SEC paragraphs
 pursuant to SEC Staff Accounting Bulletin No. 120, SEC Staff Announcement at the March 24, 2022 EITF Meeting, and Staff Accounting Bulletin Topic 6.B, Accounting Series Release 280—General Revision of Regulation S-X: Income or Loss Applicable to
 Common Stock. ASU 2023-03 is effective upon addition to the FASB Codification. The Company is currently evaluating the impact this ASU will have on its disclosures.

 In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements: Codification Amendments in Response to the SEC's
 Disclosure Updated and Simplification Initiative. ASU 2023-06 amends the disclosure or presentation requirements related to various subtopics in the FASB Accounting Standards Codification (the "Codification"). The ASU was issued in
 response to the SEC's August 2018 final rule that updated and simplified disclosure requirements that the SEC believed were "redundant, duplicative, overlapping, outdated, or superseded." The new guidance is intended to align U.S. GAAP
 requirements with those of the SEC and to facilitate the application of U.S. GAAP for all entities. For entities subject to the SEC's existing disclosure requirements and for entities required to file or furnish financial statements with or to
 the SEC in preparation for the sale of or for purposes of issuing securities that are not subject to contractual restrictions on transfer, the effective date for each amendment will be the date on which the SEC removes that related disclosure
 from its rules. For all other entities, the amendments will be effective two years later. However, if by June 30, 2027, the SEC has not removed the related disclosure from its regulations, the amendments will be removed from the Codification and
 not become effective for any entity.

 The Company is currently evaluating the impact this ASU will have on its disclosures.

 In December 2023, the FASB issued ASU 2023-07, "Segment

 Reporting (Topic 280), Improvements to Reportable Segment Disclosures". ASU 2023-07 Requires public entities to disclose significant segment expenses, an amount and description for other segment items, the title and position of the
 entity's chief operating decision maker ("CODM") and an explanation of how the CODM uses the reported measures of profit or loss to assess segment performance, and, on an interim basis, certain segment related disclosures that previously were
 required only on an annual basis. ASU 2023-07 also clarifies that entities with a single reportable segment are subject to both new and existing segment reporting requirements and that an entity is permitted to disclose multiple measures of
 segment profit or loss, provided that certain criteria are met. ASU 2023-07 requires annual disclosures for fiscal years beginning January 1, 2024 and interim disclosures for fiscal years beginning January 1, 2025. Early adoption is permitted.
 The Company is required to apply the amendments in this update retrospectively to all prior periods presented in the financial statements. The Company will update its segment related disclosures upon adoption.

 In December 2023, the FASB issued ASU No. 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures." ASU 2023-09 requires public business entities to disclose in their rate reconciliation table additional categories of information about
 federal, state and foreign income taxes and to provide more details about the reconciling items in some categories if items meet a quantitative threshold. ASU 2023-09 also requires all entities to disclose income taxes paid, net of refunds,
 disaggregated by federal, state and foreign taxes for annual periods and to disaggregate the information by jurisdiction based on a quantitative threshold, among other things. ASU 2023-09 is effective for us on January 1, 2025, though early
 adoption is permitted. The Company will update its income tax disclosures upon adoption.

 Table

 Note 2 — Investment

 Securities

 The amortized cost, fair values, and
 unrealized gains and losses of the securities available-for-sale are as follows:

 Gross Unrealized

 Amortized

 Cost

 Gains

 As of

 $

 3,230

 $

 $

 $

 3,224

 180,543

 3,022

 19,727

 -

 14,743

 Other

 -

 -

 $

 199,374

 $

 3,075

 $

 19,937

 $

 (1) All mortgage-backed securities and collateralized mortgage
 obligations were issued by an agency or government sponsored entity of the U.S. Government.

 Gross Unrealized

 Amortized

 Cost

 Gains

 As of December 31, 2022

 $

 4,989

 $

 -

 $

 $

 4,964

 4,430

 4,427

 162,314

 29,795

 1,085

 -

 1,054

 10,043

 -

 9,581

 Other

 -

 -

 $

 183,171

 $

 $

 30,337

 $

 152,864

 (1) All mortgage-backed securities and collateralized mortgage obligations were issued by an agency or government sponsored entity of the U.S. Government.

 The book values, estimated fair values and unrealized gains and losses of investments classified as held-to-maturity are
 as follows:

 Gross Unrealized

 Amortized

 Cost

 Gains

 Allowance

 for Credit

 As of December 31, 2023

 $

 664,728

 $

 $

 132,043

 $

 532,715

 $

 -

 74,170

 -

 14,017

 60,153

 -

 78,717

 Total held-to-maturity securities

 $

 $

 $

 146,240

 $

 671,585

 $

 ( 1) All mortgage-backed securities and collateralized mortgage obligations were issued
 by an agency or government sponsored entity of the U.S. Government.

 Table

 Note 2—Investment Securities—Continued

 Gross Unrealized

 Amortized

 Cost

 Gains

 Allowance

 for Credit

 As of December 31, 2022

 $

 702,858

 $

 $

 141,121

 $

 561,766

 $

 -

 80,186

 -

 15,701

 64,485

 -

 62,142

 Total held-to-maturity securities

 $

 845,346

 $

 $

 157,031

 $

 688,393

 $

 (1) All mortgage-backed securities and collateralized mortgage obligations were issued by an agency or government
 sponsored entity of the U.S. Government.

 The allowance for
 credit losses on held-to-maturity securities is a contra-asset valuation account that is deducted from the amortized cost basis of held-to-maturity securities to present the net amount expected to be collected. Management measures expected
 credit losses on held-to-maturity securities on a collective basis by major security type with each type sharing similar risk characteristics, and considers historical credit loss information that is adjusted for current conditions and
 reasonable and supportable forecasts. With regard to residential mortgage-backed securities issued by the U.S. government, or agencies thereof, it is expected that the securities will not be settled at prices less than the amortized cost bases
 of the securities as such securities are backed by the full faith and credit of and/or guaranteed by the U.S. government. Accordingly, no
 allowance for credit losses has been recorded for these securities. With regard to securities issued by States and political subdivisions and other held-to-maturity securities, management considers (i) issuer bond ratings, (ii) historical loss
 rates for given bond ratings, (iii) whether issuers continue to make timely principal and interest payments under the contractual terms of the securities, (iv) internal forecasts and (v) whether or not such securities are guaranteed or
 pre-refunded by the issuers.

 Fair values are based on quoted market prices or dealer quotes. If a quoted market price or dealer quote is not available, fair value is estimated using quoted market prices for similar securities.

 Table

 Note 2—Investment Securities—Continued

 The following tables show the gross unrealized losses for available-for-sale securities, for which an allowance for credit losses has not been recorded, that are less than 12
 months and 12 months or more:

 Less Than 12 Months

 12 Months or More

 Total

 Available-for-Sale Securities

 $

 $

 -

 $

 1,235

 $

 $

 1,268

 $

 1,629

 80,746

 19,716

 82,375

 19,727

 -

 -

 -

 -

 9,853

 9,853

 $

 1,662

 $

 $

 92,369

 $

 19,926

 $

 94,031

 $

 19,937

 (1) All mortgage-backed securities and collateralized mortgage obligations were issued by an agency or government sponsored
 entity of the U.S. Government.

 Less Than 12 Months

 12 Months or More

 Total

 Available-for-Sale Securities

 $

 4,964

 $

 $

 -

 $

 -

 $

 4,964

 $

 1,326

 1,704

 35,117

 1,639

 96,589

 28,156

 131,706

 29,795

 Collateralized mortgage obligations

 1,054

 -

 -

 1,054

 -

 -

 9,581

 9,581

 $

 41,513

 $

 1,696

 $

 107,496

 $

 28,641

 $

 149,009

 $

 30,337

 (1) All mortgage-backed securities and collateralized mortgage obligations were issued by an agency or government sponsored
 entity of the U.S. Government.

 2023, the Company held 176 available-for-sale securities of which 6 were in an unrealized loss position for less than twelve months and 138
 securities were in an unrealized loss position for twelve months or more without an allowance for credit losses. Because the decline in fair value is attributable to changes in interest rates and not credit quality and because the Company does
 not have the intent to sell these securities and it is more likely than not that it will not be required to sell the securities before their anticipated recovery, the Company does not consider these securities to be impaired. Management
 evaluates the available-for-sale securities in an unrealized loss position, relying primarily on industry analyst reports and observations of market conditions and interest rate fluctuations.

 The following table presents the activity in the allowance for credit
 losses for held-to-maturity securities by major type:

 Municipal

 securities

 Mortgage-backed

 securities

 Collateralized

 mortgage

 obligations

 Total

 Allowance for credit losses - securities

 Beginning Balance

 $

 $

 -

 $

 -

 $

 -

 -

 Ending Balance

 $

 $

 -

 $

 -

 $

 Table

 Note 2—Investment Securities—Continued

 Municipal

 securities

 Mortgage-backed

 securities

 Collateralized

 mortgage

 obligations

 Total

 Allowance for credit losses - securities

 Beginning Balance

 $

 -

 $

 -

 $

 -

 $

 -

 -

 -

 Ending Balance

 $

 $

 -

 $

 -

 $

 The amortized cost and estimated fair values of investment
 securities at December 31, 2023 by contractual final maturity are shown in the following table:

 Available-for-Sale

 Held-to-Maturity

 Securities

 maturing in:

 One year or less

 $

 $

 $

 $

 After one year through
 five years

 21,182

 20,842

 18,020

 17,792

 After five years through
 ten years

 5,300

 5,185

 23,121

 22,023

 After ten years

 172,410

 156,005

 775,672

 630,895

 Total

 $

 199,374

 $

 $

 $

 671,585

 Maturities are based
 on the final contractual payment dates, and do not reflect the impact of prepayments or early redemptions that may occur. Expected maturities of mortgage-backed and CMO securities may differ from contractual maturities because borrowers have the
 right to call or prepay obligations with or without call or prepayment penalties.

 The Company monitors the credit quality of those held-to-maturity securities not issued by the U.S. government or one of its agencies or government
 sponsored entities, through the use of credit ratings. Credit ratings are reviewed and updated quarterly. The following tables summarize the amortized cost of held-to-maturity municipal securities by credit rating as of the dates indicated:

 Held-to-Maturity

 AAA/AA/A

 BBB/BB/B

 Not Rated

 Total

 $

 20,203

 $

 $

 58,192

 $

 Total

 $

 20,203

 $

 $

 58,192

 $

 As of December
 21, 2023, there were no past due principal or interest payments associated with
 held-to-maturity municipal securities.

 Note 2—Investment Securities—Continued

 Held-to-Maturity

 AAA/AA/A

 BBB/BB/B

 Not Rated

 Total

 $

 19,380

 $

 $

 42,534

 $

 Total

 $

 19,380

 $

 $

 42,534

 $

 Proceeds and gross realized gains and losses from sales and
 calls of investment securities were as follows:

 Gross Proceeds

 Gross Gains

 Gross Losses

 2023

 $

 39,901

 $

 -

 $

 8,199

 2022

 $

 51,359

 $

 $

 10,691

 2021

 $

 301,320

 $

 5,570

 $

 3,016

 Pledged Securities

 As of December 31, 2023, investment securities carried at $ 794.1 million were pledged to secure public deposits, Federal Home Loan Bank ("FHLB") and Federal Reserve Bank ("FRB") borrowings, and other
 government agency deposits as required by law. This amount was $ 478.7 million at December 31, 2022.

 Note 3—Federal Home Loan Bank Stock and Other Non-Marketable Securities

 The Bank is a member of the FHLB system. Members are required to own a certain amount of stock based on the level of borrowings and
 other factors, and may invest in additional amounts. FHLB stock and other equity securities are carried at cost, classified as restricted securities, and periodically evaluated for impairment based on ultimate recovery of par value. Both cash and
 stock dividends are reported as income. FHLB stock and other equity securities are reported in Non-Marketable Securities on the Company's consolidated statements of financial condition and totaled $ 15.5 million at both December 31, 2023 and 2022.

 Note 4—Loans and Leases

 Loans and leases as of the dates indicated consisted of the following:

 2023

 2022

 Loans and leases held-for-investment, net

 $

 1,323,038

 $

 1,328,691

 2,677,391

 2,609,920

 169,684

 112,629

 5,212

 5,886

 3,521,718

 Unearned income

 ( 10,708

)

 ( 9,357

)

 Allowance for credit losses

 ( 74,965

)

 ( 66,885

)

 Total loans and leases held-for-investment, net

 $

 3,579,724

 $

 3,445,476

 At December 31, 2023, the portion of loans that were approved for
 pledging as collateral on borrowing lines with the Federal Home Loan Bank ("FHLB") and the Federal Reserve Bank ("FRB") were $ 1.3
 billion and $ 1.5 billion, respectively. The borrowing capacity on these loans was $ 758.3 million from FHLB and $ 1.1 billion from the FRB at
 December 31, 2023.

 The following tables show an aging analysis of the loan and lease portfolio, net of unearned income, by the time past due at December 31, 2023 and 2022:

 Current

 30-89 Days

 Past Due

 90+ Days Past

 Due

 Non-

 accrual

 Total Past

 Due

 Total

 Loans and leases held-for-investment, net

 $

 1,314,928

 $

 -

 $

 -

 $

 -

 $

 -

 $

 1,314,928

 -

 -

 -

 -

 399,946

 -

 -

 -

 -

 -

 -

 2,669,245

 -

 -

 2,669,281

 499,341

 -

 -

 -

 -

 -

 -

 167,086

 -

 -

 -

 -

 167,086

 5,209

 -

 -

 5,212

 Total loans and leases, net

 $

 3,654,618

 $

 $

 -

 $

 -

 $

 $

 Table

 Note 4—Loans and Leases —Continued

 Current

 30-89 Days

 Past Due

 90+ Days Past

 Due

 Non-

 accrual

 Total Past

 Due

 Total

 Loans and leases held-for-investment, net

 $

 1,319,911

 $

 -

 $

 -

 $

 $

 $

 1,320,314

 -

 -

 -

 -

 -

 -

 -

 -

 166,370

 -

 -

 2,600,972

 -

 -

 2,601,543

 -

 -

 -

 -

 -

 -

 -

 -

 111,649

 -

 -

 -

 -

 111,649

 5,789

 -

 -

 5,886

 Total loans and leases, net

 $

 3,511,693

 $

 $

 -

 $

 $

 $

 Non-accrual loans are
 summarized as follows:

 2023

 2022

 Non-accrual loans and leases:

 Non-accrual loans and leases

 $

 -

 $

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 Total non-accrual loans and leases

 $

 -

 $

 Table

 Note 4—Loans and Leases —Continued

 When borrowers are experiencing financial
 difficulty, the Company may agree to modify the contractual terms of a loan to a borrower in order to assist the borrower in repaying principal and interest owed to the Company.

 The Company's modifications of loans to borrowers
 experiencing financial difficulty are generally in the form of term extensions, repayment plans, payment deferrals, forbearance agreements, interest rate reductions, forgiveness of interest and/or fees, or any combination thereof. Commercial
 loans modified to borrowers experiencing financial difficulty are primarily loans that are substandard or non-accrual, where the maturity date was extended. Modifications on personal real estate loans are primarily those placed on forbearance
 plans, repayment plans, or deferral plans where monthly payments are suspended for a period of time or past due amounts are paid off over a certain period of time in the future or set up as a balloon payment at maturity. Modifications to
 certain credit card and other small consumer loans are often modified under debt counseling programs that can reduce the contractual rate or, in certain instances, forgive certain fees and interest charges. Other consumer loans modified to
 borrowers experiencing financial difficulty consist of various other workout arrangements with consumer customers.

 The following table presents the amortized cost of loans to borrowers
 experiencing financial difficulty by portfolio segment and type of modification during the period presented.

 Amortized cost associated with the following modification types:

 Interest

 Rate

 reduction

 Maturity

 or term

 extension

 Principal

 foregiveness

 Payment

 deferral

 Multiple

 modification

 types 1

 Total 2

 Percentage

 of total

 loans 3

 Loans and leases held-for-investment, net

 $

 -

 $

 1,600

 $

 -

 $

 -

 $

 -

 $

 1,600

 0.12

 %

 -

 -

 -

 -

 -

 -

 0.00

 %

 -

 -

 -

 -

 0.03

 %

 -

 -

 -

 -

 -

 -

 0.00

 %

 -

 1,600

 -

 -

 1,721

 0.06

 %

 -

 4,669

 -

 -

 -

 4,669

 0.93

 %

 -

 -

 -

 -

 -

 -

 0.00

 %

 -

 -

 -

 -

 -

 -

 0.00

 %

 -

 -

 -

 -

 -

 -

 0.00

 %

 Total

 $

 -

 $

 6,269

 $

 -

 $

 -

 $

 $

 6,390

 0.17

 %

 During the twelve months ended December
 31, 2023, we had one residential real estate loan that had the contractual interest rate decreased by 1.00 % and the contractual term was extended by 120 months. In addition, we had an additional borrower with one commercial real estate loan that the
 contractual term was extended by 119 months, and two commercial & industrial loans that contractual term was extended by eleven months.

 Table

 We closely
 monitor the performance of the loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of the modification efforts. The modified loans presented in the table above were current and had no loss exposure as of December 31, 2023.

 A payment default is defined as
 a loan having a payment past due 90 days or more after a modification took place. There were no loans that were modified within the last 12 months that had a payment default during the twelve months ended December 31, 2023.

 The effect of modifications made to borrowers
 experiencing financial difficulty is already included in the ACL because of the measurement methodologies used to estimate the ACL, therefore, a change to the ACL is generally not recorded upon modification. If principal forgiveness is
 provided, that portion of the loan will be charged-off, resulting in a reduction of the amortized cost basis and a corresponding adjustment to the ACL. An assessment of whether the borrower is experiencing financial difficulty is made on the
 date of a modification.

 The following table lists total troubled debt
 restructured loans that the Company is either accruing or not accruing interest by loan category at December 31, 2022, prior to the adoption of ASU 2022-02:

 Troubled debt restructured loans and leases:

 Accruing TDR loans and leases

 $

 -

 -

 1,305

 -

 1,305

 -

 -

 -

 Subtotal

 1,311

 Non-accruing TDR loans and leases

 Accruing TDR loans and leases

 $

 -

 -

 -

 -

 -

 -

 -

 -

 -

 Subtotal

 -

 Total TDR loans and leases

 $

 1,311

 Table

 The following table summarizes
 TDRs outstanding by year of occurrence:

 # of Accruing TDR

 $ of Accruing TDR

 # of Non-accruing TDR

 $ of Non- accruing TDR

 # of Total TDR

 $ of Total TDR

 Loan and lease TDRs

 2022

 -

 $

 -

 -

 $

 -

 -

 $

 -

 2021

 -

 -

 -

 -

 -

 -

 2020

 -

 -

 2019

 -

 -

 -

 -

 -

 -

 Prior

 1,054

 -

 -

 1,054

 Total

 $

 1,311

 -

 $

 -

 $

 1,311

 The following table presents the credit risk rating
 categories for loans and leases held-for-investment (accruing and non-accruing) net of unearned income by loan portfolio segment and class as of the dates indicated.

 Pass

 Special

 Mention

 Sub-

 standard

 Total Loans

 & Leases

 Total

 Allowance

 for Credit

 Loans and leases held for investment, net

 $

 1,308,717

 $

 6,211

 $

 -

 $

 1,314,928

 $

 26,093

 729,135

 12,329

 7,744

 399,217

 -

 7,770

 -

 -

 4,432

 2,649,431

 18,540

 1,310

 2,669,281

 46,039

 486,439

 12,458

 13,380

 310,496

 3,236

 8,872

 167,080

 -

 167,086

 6,537

 5,036

 -

 5,212

 Total loans and leases, net

 $

 3,618,482

 $

 34,240

 $

 1,967

 $

 $

 Pass

 Special

 Mention

 Sub-

 standard

 Total Loans

 & Leases

 Total

 Allowance

 for Loan

 Loans and leases held for investment, net

 $

 1,314,377

 $

 5,535

 $

 $

 1,320,314

 $

 18,055

 709,927

 10,891

 6,120

 14,496

 387,371

 -

 7,508

 166,370

 -

 3,026

 2,578,045

 16,426

 7,072

 2,601,543

 43,085

 478,437

 11,503

 308,830

 5,682

 10,202

 111,568

 -

 111,649

 1,924

 5,650

 -

 5,886

 Total loans and leases, net

 $

 3,482,530

 $

 22,252

 $

 7,579

 $

 $

 Table

 Note 4—Loans and Leases —Continued

 The following table presents outstanding loan and lease balances held-for-investment by segment and class, credit quality indicators, vintage year by class of
 financing receivable, and current period gross charge-offs by year of origination as follows:

 Term Loans Amortized Cost Basis by Origination Year

 2023

 2022

 2021

 2020

 2019

 Prior

 Revolving Loans

 Total

 Net loans and leases held for investment

 Pass

 $

 121,418

 $

 169,171

 $

 221,708

 $

 143,502

 $

 67,505

 $

 261,344

 $

 324,069

 $

 1,308,717

 -

 2,395

 -

 -

 -

 2,216

 1,600

 6,211

 -

 -

 -

 -

 -

 -

 -

 -

 Total Commercial

 $

 121,418

 $

 171,566

 $

 221,708

 $

 143,502

 $

 67,505

 $

 263,560

 $

 325,669

 $

 1,314,928

 $

 -

 $

 -

 $

 -

 $

 -

 $

 -

 $

 -

 $

 -

 $

 -

 Pass

 $

 37,849

 $

 71,367

 $

 40,848

 $

 50,445

 $

 12,008

 $

 165,267

 $

 351,351

 $

 729,135

 -

 -

 -

 2,020

 9,715

 -

 12,329

 -

 -

 -

 -

 -

 -

 Total Agricultural

 $

 37,849

 $

 71,367

 $

 40,848

 $

 51,039

 $

 14,028

 $

 175,527

 $

 351,351

 $

 $

 -

 $

 -

 $

 -

 $

 -

 $

 -

 $

 -

 $

 -

 $

 -

 Pass

 $

 41,173

 $

 62,505

 $

 88,559

 $

 78,810

 $

 13,299

 $

 70,339

 $

 44,532

 $

 399,217

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 Total Residential and home equity

 $

 41,173

 $

 62,505

 $

 88,559

 $

 78,810

 $

 13,299

 $

 71,104

 $

 44,532

 $

 $

 -

 $

 -

 $

 -

 $

 -

 $

 -

 $

 $

 -

 $

 Pass

 $

 -

 $

 2,500

 $

 -

 $

 -

 $

 1,575

 $

 -

 $

 208,287

 $

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 Total construction

 $

 -

 $

 2,500

 $

 -

 $

 -

 $

 1,575

 $

 -

 $

 208,287

 $

 $

 -

 $

 -

 $

 -

 $

 -

 $

 -

 $

 -

 $

 -

 $

 -

 Total Real estate

 $

 200,440

 $

 307,938

 $

 351,115

 $

 273,351

 $

 96,407

 $

 510,191

 $

 929,839

 $

 2,669,281

 Pass

 $

 49,162

 $

 25,795

 $

 21,695

 $

 7,193

 $

 4,123

 $

 6,674

 $

 371,797

 $

 486,439

 2,500

 4,903

 -

 -

 4,562

 12,458

 -

 -

 -

 -

 -

 -

 Total Commercial & industrial

 $

 51,662

 $

 25,822

 $

 26,598

 $

 7,659

 $

 4,123

 $

 7,150

 $

 376,359

 $

 $

 -

 $

 -

 $

 -

 $

 -

 $

 -

 $

 -

 $

 -

 $

 -

 Pass

 $

 3,013

 $

 4,585

 $

 2,296

 $

 $

 1,026

 $

 2,116

 $

 296,772

 $

 310,496

 -

 -

 -

 -

 3,109

 3,236

 -

 -

 -

 -

 -

 -

 Total Agricultural

 $

 3,013

 $

 4,637

 $

 2,371

 $

 $

 1,031

 $

 2,116

 $

 299,881

 $

 $

 -

 $

 -

 $

 -

 $

 -

 $

 -

 $

 -

 $

 -

 $

 -

 Table

 Term Loans Amortized Cost Basis by Origination Year

 2023

 2022

 2021

 2020

 2019

 Prior

 Revolving Loans

 Total

 Net loans and leases held for investment

 Pass

 $

 81,287

 $

 31,954

 $

 10,786

 $

 9,514

 $

 4,667

 $

 28,872

 $

 -

 $

 167,080

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 Total Commercial leases

 $

 81,287

 $

 31,954

 $

 10,786

 $

 9,514

 $

 4,673

 $

 28,872

 $

 -

 $

 167,086

 $

 -

 $

 -

 $

 -

 $

 -

 $

 -

 $

 -

 $

 -

 $

 -

 Pass

 $

 1,650

 $

 $

 $

 $

 $

 1,400

 $

 $

 5,036

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 Total Consumer and other

 $

 1,802

 $

 $

 $

 $

 $

 1,424

 $

 $

 5,212

 $

 $

 $

 -

 $

 -

 $

 -

 $

 $

 -

 $

 Pass

 $

 335,552

 $

 368,807

 $

 386,267

 $

 290,200

 $

 104,248

 $

 536,012

 $

 1,597,396

 $

 3,618,482

 2,500

 2,474

 4,978

 1,060

 2,026

 11,931

 9,271

 34,240

 -

 -

 -

 1,810

 -

 1,967

 $

 338,204

 $

 371,281

 $

 391,245

 $

 291,260

 $

 106,279

 $

 549,753

 $

 1,606,667

 $

 Total current-period gross charge-offs

 $

 $

 $

 -

 $

 -

 $

 -

 $

 $

 -

 $

 Term Loans Amortized Cost Basis by Origination Year

 2022

 2021

 2020

 2019

 2018

 Prior

 Revolving Loans

 Total

 Net loans and leases held for investment

 Pass

 $

 194,698

 $

 234,478

 $

 150,203

 $

 71,333

 $

 85,132

 $

 218,261

 $

 360,272

 $

 1,314,377

 -

 -

 -

 -

 3,820

 1,115

 5,535

 -

 -

 -

 -

 -

 -

 Total Commercial

 $

 194,698

 $

 234,478

 $

 150,203

 $

 71,333

 $

 88,952

 $

 219,778

 $

 360,872

 $

 1,320,314

 $

 -

 $

 -

 $

 $

 -

 $

 -

 $

 -

 $

 -

 $

 Pass

 $

 67,044

 $

 42,546

 $

 54,893

 $

 15,074

 $

 50,186

 $

 144,052

 $

 336,132

 $

 709,927

 -

 -

 -

 2,636

 -

 -

 8,255

 10,891

 -

 -

 -

 -

 6,009

 -

 6,120

 Total Agricultural

 $

 67,044

 $

 42,546

 $

 54,893

 $

 17,710

 $

 50,297

 $

 150,061

 $

 344,387

 $

 $

 -

 $

 -

 $

 -

 $

 -

 $

 -

 $

 -

 $

 -

 $

 -

 Pass

 $

 66,847

 $

 96,354

 $

 86,545

 $

 14,530

 $

 6,632

 $

 76,155

 $

 40,308

 $

 387,371

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 Total Residential and home equity

 $

 66,847

 $

 96,354

 $

 86,545

 $

 14,530

 $

 6,632

 $

 76,455

 $

 40,390

 $

 $

 -

 $

 -

 $

 -

 $

 -

 $

 -

 $

 $

 -

 $

 Pass

 $

 2,000

 $

 $

 -

 $

 1,575

 $

 -

 $

 $

 162,763

 $

 166,370

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 Total construction

 $

 2,000

 $

 $

 -

 $

 1,575

 $

 -

 $

 $

 162,931

 $

 $

 -

 $

 -

 $

 -

 $

 -

 $

 -

 $

 -

 $

 -

 $

 -

 Total Real estate

 $

 330,589

 $

 373,379

 $

 291,641

 $

 105,148

 $

 145,881

 $

 446,325

 $

 908,580

 $

 2,601,543

 Pass

 $

 34,410

 $

 36,846

 $

 12,325

 $

 8,245

 $

 7,167

 $

 5,679

 $

 373,765

 $

 478,437

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 Total Commercial & industrial

 $

 34,410

 $

 36,909

 $

 12,325

 $

 8,245

 $

 7,168

 $

 5,684

 $

 374,017

 $

 $

 -

 $

 -

 $

 -

 $

 $

 $

 -

 $

 -

 $

 Pass

 $

 5,378

 $

 3,083

 $

 $

 1,515

 $

 $

 2,071

 $

 295,158

 $

 308,830

 -

 -

 -

 -

 -

 -

 5,682

 5,682

 -

 -

 -

 -

 -

 Total Agricultural

 $

 5,378

 $

 3,083

 $

 $

 1,526

 $

 $

 2,071

 $

 300,840

 $

 $

 -

 $

 -

 $

 -

 $

 -

 $

 -

 $

 -

 $

 -

 $

 -

 Term Loans Amortized Cost Basis by Origination Year

 2022

 2021

 2020

 2019

 2018

 Prior

 Revolving Loans

 Total

 Net loans and leases held for investment

 Pass

 $

 35,689

 $

 15,874

 $

 13,050

 $

 5,904

 $

 20,560

 $

 20,491

 $

 -

 $

 111,568

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 Total Commercial leases

 $

 35,689

 $

 15,874

 $

 13,050

 $

 5,985

 $

 20,560

 $

 20,491

 $

 -

 $

 111,649

 $

 -

 $

 -

 $

 -

 $

 -

 $

 -

 $

 -

 $

 -

 $

 -

 Pass

 $

 1,476

 $

 $

 $

 $

 $

 1,769

 $

 1,005

 $

 5,650

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 Total Consumer and other

 $

 1,712

 $

 $

 $

 $

 $

 1,769

 $

 1,005

 $

 5,886

 $

 $

 $

 $

 $

 $

 $

 -

 $

 Pass

 $

 407,542

 $

 429,816

 $

 318,280

 $

 118,352

 $

 170,628

 $

 468,509

 $

 1,569,403

 $

 3,482,530

 -

 -

 2,717

 3,820

 1,115

 14,537

 $

 22,252

 -

 -

 6,716

 $

 7,579

 $

 407,778

 $

 429,879

 $

 318,280

 $

 121,080

 $

 174,562

 $

 476,340

 $

 1,584,442

 $

 Total current-period gross charge-offs

 $

 $

 $

 $

 $

 $

 $

 -

 $

 Certain directors and executive officers of the
 Company are defined as related parties. These related parties, including their immediate families and companies in which they are principal owners, were loan customers of the Bank during the twelve months ended December 31, 2023 and December
 31, 2022. Such loans were made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable loans with borrowers not related to the Company. These loans did not involve more than the
 normal risk of collectibility or have other unfavorable features. A summary of the changes in those loans is as follows:

 2023

 2022

 Balance at beginning of the period

 $

 17,521

 $

 18,128

 New loans or advances during year

 1,706

 Repayments

 ( 2,192

)

 ( 1,130

)

 Balance at end of period

 $

 17,035

 $

 17,521

 Changes in the allowance for credit losses are as follows:

 Year Ended December 31, 2023

 Commercial &

 R/E

 Residential &

 Home Equity

 &

 Leases

 Consumer &

 Other

 Total

 Allowance for credit losses:

 Balance at beginning of year

 $

 32,551

 $

 3,026

 $

 7,508

 $

 21,705

 $

 1,924

 $

 $

 Provision for/(recapture of) credit losses

 1,116

 1,406

 4,613

 ( 19

)

 7,750

 Charge-offs

 -

 -

 ( 14

)

 -

 -

 ( 46

)

 ( 60

)

 Recoveries

 -

 -

 Net (charge-offs) / recoveries

 -

 -

 ( 15

)

 Balance at end of year

 $

 33,837

 $

 4,432

 $

 7,770

 $

 22,252

 $

 6,537

 $

 $

 Year Ended December 31, 2022

 Commercial &

 R/E

 Residential &

 Home Equity

 &

 Leases

 Consumer &

 Other

 Total

 Allowance for credit losses:

 Balance at beginning of year

 $

 38,149

 $

 1,456

 $

 2,847

 $

 16,954

 $

 $

 $

 61,007

 Impact of Adopting ASC 326

 ( 6,190

)

 1,855

 3,032

 ( 152

)

 -

 Provision for/(recapture of) credit losses

 ( 285

)

 1,523

 4,001

 ( 301

)

 6,057

 Charge-offs

 ( 170

)

 -

 ( 25

)

 ( 324

)

 -

 ( 62

)

 ( 581

)

 Recoveries

 -

 -

 -

 Net (charge-offs) / recoveries

 ( 170

)

 -

 ( 76

)

 -

 ( 39

)

 ( 179

)

 Balance at end of year

 $

 32,551

 $

 3,026

 $

 7,508

 $

 21,705

 $

 1,924

 $

 $

 Table

 Note 4—Loans and Leases —Continued

 A loan or lease is considered collateral dependent when the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the
 collateral. When management determines that foreclosure is probable, expected credit losses for collateral dependent loans or leases are based on the fair value of the collateral at the reporting date, adjusted for selling costs as appropriate.
 The collateral on the loans and leases is a significant portion of what secures the collateral dependent loans or leases and significant changes to the fair value of the collateral can impact the ACL. During 2023, there were no significant
 changes to the collateral that secures the collateral dependent loans, whether due to general deterioration or with credit quality indicators like appraisal value. The following tables present the amortized cost basis for collateral
 dependent loans and leases by type as of the dates indicated:

 Real Estate

 Vehicles and

 Equipment

 Total

 Collateral dependent loans and leases

 $

 1,517

 $

 -

 $

 1,517

 6,118

 -

 6,118

 1,607

 -

 1,607

 -

 -

 -

 Total Real estate

 9,242

 -

 9,242

 -

 -

 -

 -

 -

 -

 $

 9,242

 $

 $

 9,884

 Real Estate

 Vehicles and

 Equipment

 Total

 Collateral dependent loans and leases

 $

 1,114

 $

 -

 $

 1,114

 11,035

 -

 11,035

 2,153

 -

 2,153

 -

 -

 -

 Total Real estate

 14,302

 -

 14,302

 -

 -

 -

 -

 -

 -

 -

 -

 $

 14,302

 $

 $

 14,473

 Note 5—Premises and Equipment

 Premises and equipment consisted of the following:

 2023

 2022

 Premises and equipment:

 Buildings and land

 $

 63,991

 $

 61,274

 Furniture, fixtures, and equipment

 24,236

 23,203

 Leasehold improvements

 3,982

 3,982

 Subtotal

 92,209

 88,459

 Accumulated depreciation and amortization

 ( 40,302

)

 ( 38,983

)

 Total premises and equipment

 $

 51,907

 $

 49,476

 Depreciation and amortization on premises and equipment included in occupancy and equipment expense amounted to $ 2.5 million, $ 2.4 million, and $ 2.6 million for the years ended December 31, 2023, 2022 and 2021, respectively. Rental income was $ 749,000, $ 640,000, and $ 491,000 for the years ended December 31, 2023, 2022, and 2021, respectively, and was recorded in other income.

 Note 6—Other Real Estate Owned

 The Bank reported $ 873,000 in other real estate owned at December
 31, 2023 and 2022, which includes property no longer utilized for business operations and property acquired through foreclosure proceedings. These properties are carried at fair value less selling costs determined at the date acquired. Losses, if
 any, arising from properties acquired through foreclosure are charged against the allowance for loan losses at the time of foreclosure. Subsequent declines in value, periodic holding costs, and net gains or losses on disposition are included in other
 operating expense as incurred.

 Note 7—Deposits

 Certificates of deposit greater than and less than or equal to the FDIC insurance limit of $250,000 are summarized as follows:

 2023

 2022

 Certificates of deposit:

 Certificates of deposit less than or equal to $250,000

 $

 325,798

 $

 202,554

 Certificates of deposit greater than $250,000

 318,830

 128,846

 Total certificates of deposit

 $

 644,628

 $

 331,400

 Scheduled maturities for certificates of deposit are as follows for the years ending December 31:

 2024

 $

 612,052

 2025

 25,996

 2026

 4,840

 2027

 2028

 1,053

 Total certificates of deposit

 $

 644,628

 Note 8—Short-term borrowings

 As of December 31, 2023 and 2022, committed lines of credit arrangements totaling $ 2.3 billion and $ 1.5 billion, respectively, were available to the Company
 from unaffiliated banks. The average Federal Funds interest rate as of December 31, 2023 was 5.50 %.

 The Company is a member of the FHLB of San Francisco and has a committed credit line of $ 760.1 million, which is secured by $ 1.3 billion in various real estate loans
 and investment securities pledged as collateral. Borrowings generally provide for interest at the then current published rate, which was 5.64 %
 as of December 31, 2023.

 T he Company has $ 1.5 billion in pledged loans and $ 134.9 million in pledged securities at
 par value with the FRB. As of December 31, 2023, the Company's overnight borrowing capacity using the primary credit facilities from the Fed account was $ 1.3 billion. The borrowing rate was 5.50 % as of December 31, 2023. There
 were no outstanding advances on the above borrowing facilities as of December 31, 2023 and 2022.

 Note 9—Long-term Subordinated Debentures

 In 2003, the Company formed a wholly-owned Connecticut statutory business trust, FMCB Statutory Trust I ("Statutory Trust I"), which issued $ 10.0 million of guaranteed preferred beneficial interests in the Company's junior subordinated deferrable interest debentures (the "Trust Preferred Securities"). The Company is
 not considered the primary beneficiary of the trust (variable interest entity), therefore the trust is not consolidated in the Company's financial statements, but rather the subordinated debentures are shown as a liability. These debentures qualify
 as Tier 1 capital under current regulatory guidelines. All of the common securities of Statutory Trust I are owned by the Company. The proceeds from the issuance of the common securities and the Trust Preferred Securities were used by FMCB Statutory
 Trust to purchase $ 10.3 million of junior subordinated debentures of the Company, which carry a variable rate based on 3-month SOFR plus 2.85 %. The debentures
 represent the sole asset of Statutory Trust I. The Trust Preferred Securities accrue and pay distributions at a variable rate based on 3-month
 SOFR plus 2.85 % per annum of the stated liquidation value of $ 1,000 per capital security. The Company has entered into contractual arrangements which, taken collectively, fully and unconditionally guarantee payment to the extent that
 Statutory Trust I has funds available therefor of: (i) accrued and unpaid distributions required to be paid on the Trust Preferred Securities; (ii) the redemption price with respect to any Trust Preferred Securities called for redemption by Statutory
 Trust I; and (iii) payments due upon a voluntary or involuntary dissolution, winding up, or liquidation of Statutory Trust I.

 The Trust Preferred Securities are mandatorily redeemable upon maturity of the subordinated debentures on December 17, 2033, or upon earlier redemption as provided in the indenture. The Company has the right to redeem the subordinated debentures purchased by Statutory Trust I, in
 whole or in part, on or after December 17, 2008. As specified in the indenture, if the subordinated debentures are redeemed prior to maturity, the redemption price will be the principal amount and any accrued but unpaid interest. Additionally, if the
 Company decided to defer interest on the subordinated debentures, the Company would be prohibited from paying cash dividends on the Company's common stock.

 Note 10—Employee Benefit Plans

 Executive Retirement Plan

 The Company, through the Bank, sponsors an Executive Retirement Plan ("ERP") for certain executive level employees. The ERP is a non-qualified deferred compensation
 plan and was developed to supplement the Company's Profit Sharing Plan, which, as a qualified retirement plan, has a ceiling on benefits as set by the Internal Revenue Service. The ERP is comprised of: (1) a Performance Component which makes
 contributions based upon long-term cumulative profitability and increase in market value of the Company; (2) a Salary Component which makes contributions based upon participant salary levels; and (3) an Equity Component for which contributions are
 discretionary and subject to Board of Directors approval. The Company maintains a Rabbi Trust to fund, in part, the ERP. The Rabbi Trust is an irrevocable grantor trust to which the Company may contribute assets for the limited purpose of funding a
 nonqualified deferred compensation plan. The Company may not use the assets of the Rabbi Trust for any purpose other than meeting its obligations under the ERP; however, the assets of the Rabbi Trust remain subject to the claims of its creditors and
 are included in the consolidated financial statements. The Company contributes cash to the Rabbi Trust from time to time for the sole purpose of funding the ERP. The Rabbi Trust will use any cash the Company contributes to purchase shares of common
 stock of the Company, and other financial instruments, on the open market. ERP contributions are invested in a mix of financial instruments; however, the Equity Component contributions are invested primarily in common stock of the Company.

 Note 10—Employee Benefit Plans—Continued

 The Company expensed $ 9.1
 million to the ERP during the year ended December 31, 2023, $ 7.4 million during the year ended December 31, 2022 and $ 9.0 million during the year ended December 31, 2021. The Company's carrying value of the liability under the ERP was $ 57.5 million as of December 31, 2023 and $ 57.0
 million as of December 31, 2022. The Company's shares of common stock held as investments in the Rabbi Trust of the ERP as of December 31, 2023 and 2022 totaled 49,276 and 50,196 with an historical cost basis of $ 31.6 million and $ 31.4 million,
 respectively. All amounts have been fully funded into the Rabbi Trust as of December 31, 2023 and 2022. The consolidated investments held in the Rabbi Trust are recorded at fair value with changes in unrealized gains or losses recorded within
 non-interest income and the equal and offsetting charges in the related liability are recorded in non-interest expense in the consolidated statements of income.

 Net gains on ERP plan investments were $ 2.6 million in 2023 compared
 to net gains of $ 0.1 million in 2022 and $ 2.5
 million in 2021. Balances in non-qualified deferred compensation plans may be invested in financial instruments whose market value fluctuates based upon trends in interest rates and stock prices.

 Senior Management Retention Plan

 The Company, through the Bank, sponsors a Senior Management Retention Plan ("SMRP") for certain senior level employees. The SMRP
 is a non-qualified deferred compensation plan and was developed to supplement the Company's Profit Sharing Plan, which, as a qualified retirement plan, has a ceiling on benefits as set by the Internal Revenue Service. All contributions are
 discretionary and subject to the Board of Directors approval. The Company maintains a Rabbi Trust to fund, in part, the SMRP. The Rabbi Trust is an irrevocable grantor trust to which the Company may
 contribute assets for the limited purpose of funding a nonqualified deferred compensation plan. The Company may not use the assets of the Rabbi Trust for any purpose other than meeting its obligations under the SMRP; however, the assets of the
 Rabbi Trust remain subject to the claims of its creditors and are included in the consolidated financial statements. The Company contributes cash to the Rabbi Trust from time to time for the sole purpose of funding the SMRP. The Rabbi Trust will
 use any cash the Company contributes to purchase shares of common stock of the Company, and other financial instruments, on the open market. Contributions to the SMRP are invested primarily in common stock of the Company.

 The Company expensed $ 4.1 million to the SMRP during the year ended
 December 31, 2023, $ 3.0 million during the year ended December 31, 2022 and $ 2.7 million during the year ended December 31, 2021. The Company's carrying value of the liability under the SMRP was $ 16.9 million as of December 31, 2023 and $ 13.6 million as of December 31, 2022.
 The Company's shares of stock held as investments in the Rabbi Trust of the SMRP as of December 31, 2023 and December 31, 2022 totaled 17,806
 and 15,998 shares with an historical cost basis of $ 12.8 million and $ 10.8 million, respectively. All amounts have been fully
 funded into the Rabbi Trust as of December 31, 2023 and 2022. The consolidated investments held in the Rabbi Trust are recorded at fair value with changes recorded within non-interest income and the equal and offsetting charges in the related
 liability are recorded in non-interest expense in the consolidated statements of income.

 Net gains on SMRP plan investments were $ 0.4 million in 2023, $ 0.4 million in 2022 and $ 0.1 in 2021.
 Balances in non-qualified deferred compensation plans may be invested in financial instruments whose market value fluctuates based upon trends in interest rates and stock prices.

 Note 10—Employee Benefit Plans—Continued

 Profit Sharing Plan
 The Company, through the Bank, sponsors a Profit Sharing Plan for substantially all full-time employees of the Company with one or more years of service. The plan assets, reported at fair value, are primarily invested in mutual funds and other investments, which are primarily Level 2 inputs. Participants
 receive up to two annual employer contributions, one is discretionary and the other is mandatory. The discretionary contributions to
 the Profit Sharing Plan are determined annually by the Board of Directors. The discretionary contributions totaled $ 1.9 million, $ 1.8 million, and $ 1.6 million for the
 years ended December 31, 2023, 2022, and 2021, respectively. The mandatory contributions to the Profit Sharing Plan are made according to a predetermined set of criteria. Mandatory contributions totaled $ 2.0 million, $ 1.6 million, and $ 1.7 million for the years ended December 31, 2023, 2022, and 2021, respectively. Company employees are permitted, within limitations imposed by tax
 law, to make pretax contributions and after tax (Roth) contributions to the 401(k) feature of the Profit Sharing Plan. The Company does not match employee contributions within the 401(k) feature of the Profit Sharing Plan and the Company can
 terminate the Profit Sharing Plan at any time. Benefits pursuant to the Profit Sharing Plan vest 0 % during the first year of
 participation, 25 % per full year thereafter and after five years such benefits are fully vested.

 Life Insurance Arrangements
 The Company has purchased single premium life insurance policies on the lives of certain key employees of the Company. These policies provide: (1) financial protection to the Company in the event of the death of a key employee; and (2)
 significant income to the Company to offset the expense associated with the ERP and other employee benefit plans, since the interest earned on the cash surrender value of the policies is tax exempt as long as the policies are used to finance
 employee benefits. As compensation to each employee for agreeing to allow the Company to purchase an insurance policy on his or her life, split dollar agreements have been entered into with those employees. These agreements provide for a division
 of the life insurance death proceeds between the Company and each employee's designated beneficiary or beneficiaries.

 The Company earned tax-exempt interest on the life
 insurance policies of $ 2.0 million, $ 2.2
 million, and $ 2.2 million for the three years ended December 31, 2023, 2022, and 2021, respectively. As of December 31, 2023 and 2022,
 the total cash surrender value of the insurance policies was $ 74.9 million and $ 73.0 million, respectively.

 Note 11—Fair Value

 The Company uses fair value measurements to record fair value adjustments to certain financial and
 non-financial assets and liabilities and to determine fair value disclosures. Various financial instruments such as available-for-sale securities are recorded at fair value on a recurring basis. Additionally, from time to time, the Company may be
 required to record at fair value other assets and liabilities on a non-recurring basis, such as collateral dependent loans and other real estate owned. These non-recurring fair value adjustments typically involve lower of cost or fair value
 accounting or write-down of individual assets.

 Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Depending on the nature of the asset or liability, the Company uses
 various valuation techniques and assumptions when estimating fair value. For accounting disclosure purposes, a three-level valuation hierarchy of fair value measurements has been established. The valuation hierarchy is based upon the transparency
 of inputs to the valuation of an asset or liability as of the measurement date. The three levels are defined as follows:

 Level 1 – inputs to the valuation methodology are quoted prices for identical assets or liabilities in active markets.

 Level 2 – inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in
 markets that are not active, and inputs that are observable for the assets or liabilities, either directly or indirectly (such as interest rates, yield curves, and prepayment speeds).

 Level 3 – inputs to the valuation methodology are unobservable and significant to the fair value. These may be internally developed, using the Company's best information and assumptions
 that a market participant would consider.

 The carrying amounts and estimated fair values of financial instruments held by the Company are set forth below. Fair value estimates are made at a specific point in time based on
 relevant market information. They do not reflect any premium or discount that could result from offering for sale at one time the Company's entire holdings of a particular financial instrument. Because no market exists for many of the Company's
 financial instruments, fair value estimates are based on judgements regarding future expected loss experience, risk characteristics and economic conditions. These estimates are subjective, involve uncertainties, and cannot be determined with
 precision. Changes in assumptions could significantly affect the estimates.

 Management monitors the availability of observable market data to assess the appropriate classification of financial instruments within the fair value hierarchy. Changes in economic
 conditions or model-based valuation techniques may require the transfer of financial instruments from one fair value level to another. In such instances, the transfer is reported at the beginning of the reporting period.

 Management evaluates the significance of transfers between levels based upon the nature of the financial instrument and size of the transfer relative to total assets, total
 liabilities or total earnings.

 Note 11—Fair Value—Continued

 Securities classified as available-for-sale are reported at fair value on a recurring basis utilizing Level 1, 2 and 3 inputs. For these securities, the Company obtains
 fair value measurements from an independent pricing service. The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, trade execution
 data, market consensus prepayment speeds, credit information and the bond's terms and conditions, among other things.

 The Company does not record all loans
 and leases at fair value on a recurring basis. However, from time to time, a loan or lease is considered collateral dependent and an allowance for credit losses is established. Once a loan or lease is identified as collaterally dependent,
 management measures impairment in accordance FASB ASC Topic 326.

 These appraisals may utilize a single valuation approach or a combination of approaches including sales comparison, cost and the income approach. Adjustments are often made in the appraisal process by the appraisers to take
 into account differences between the comparable sales and income and other available data. Such adjustments can be significant and typically result in a Level 3 classification of the inputs for determining fair value. The valuation technique used
 for Level 3 non-recurring collateral dependent loans is primarily the sales comparison approach less estimated selling costs.

 Other Real Estate Owned ("OREO") is reported at fair value on a non-recurring basis. Fair values are based on recent real estate appraisals. These appraisals may use a single valuation approach or a
 combination of approaches including sales comparison, cost and the income approach. Adjustments are often made in the appraisal process by the appraisers to take into account differences between the comparable sales and income and other available
 data. Such adjustments can be significant and typically result in a Level 3 classification of the inputs for determining fair value. The valuation technique used for Level 3 non-recurring OREO is primarily the sales comparison approach less
 estimated selling costs.

 The following tables present information about the Bank's assets and liabilities measured at fair value on a recurring and non-recurring basis and indicate the fair value
 hierarchy of the valuation techniques utilized by the Bank to determine such fair value for the periods indicated.

 Fair Value Measurements

 Carrying Amount

 Level 1

 Level 2

 Level 3

 Total Fair

 Value

 Fair valued on a recurring basis:

 Available-for-sale securities

 $

 3,224

 $

 -

 $

 3,224

 $

 -

 $

 3,224

 Mortgage-backed securities

 -

 -

 Collateralized mortgage obligations

 -

 -

 -

 -

 Other

 -

 -

 Fair valued on a non-recurring basis:

 Collateral dependent loans

 $

 9,884

 $

 -

 $

 -

 $

 9,884

 $

 9,884

 Other real estate owned

 -

 -

 Table

 Note 11—Fair Value—Continued

 Fair Value Measurements

 Carrying Amount

 Level 1

 Level 2

 Level 3

 Total Fair

 Value

 Fair valued on a recurring basis:

 Available-for-sale securities

 $

 4,964

 $

 4,964

 $

 -

 $

 -

 $

 4,964

 4,427

 -

 4,427

 -

 4,427

 Mortgage-backed securities

 -

 -

 Collateralized mortgage obligations

 1,054

 -

 1,054

 -

 1,054

 9,581

 -

 9,581

 -

 9,581

 Other

 -

 -

 Fair valued on a non-recurring basis:

 Collateral dependent loans

 $

 14,473

 $

 -

 $

 -

 $

 14,473

 $

 14,473

 Other real estate owned

 -

 -

 Collateral dependent
 loans

 While the overall
 loan portfolio is not carried at fair value, the Company periodically records nonrecurring adjustments to the carrying value of loans based on fair value measurements for partial charge-offs of the uncollectible portions of those loans.
 Nonrecurring adjustments also include certain impairment amounts for collateral dependent loans when establishing the allowance for credit losses on loans. Such amounts are generally based on the fair value of the underlying collateral supporting
 the loan. In determining the value of real estate collateral, the Company relies on external and internal appraisals of property values depending on the size and complexity of the real estate collateral. The Company maintains a list of qualified
 property appraisers who review appraisal reports for reasonableness. In the case of non-real estate collateral, reliance is placed on a variety of sources, including external estimates of value and judgments based on the experience and expertise
 of internal specialists. Values of all loan collateral are regularly reviewed by credit administration. Unobservable inputs to these measurements, which include estimates and judgments often used in conjunction with appraisals, are not readily
 quantifiable. These measurements are classified as Level 3.

 Table

 Note 11—Fair Value—Continued

 The following tables summarize the carrying amount and estimated fair values of the Company's financial assets and liabilities not carried at fair value, and indicate the
 fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value for the periods indicated.

 Fair Value Measurements

 Carrying Amount

 Level 1

 Level 2

 Level 3

 Total Fair Value

 Financial Assets:

 Cash and cash equivalents

 $

 $

 $

 -

 $

 -

 $

 Held-to-maturity securities

 817,238

 -

 629,051

 58,192

 687,243

 -

 -

 Loans and leases, net

 3,579,724

 -

 -

 3,369,255

 3,369,255

 Bank-owned life insurance

 74,931

 74,931

 -

 -

 74,931

 Financial Liabilities:

 $

 4,668,095

 $

 -

 $

 4,023,467

 $

 639,315

 $

 4,662,782

 -

 12,763

 -

 12,763

 Fair Value Measurements

 Carrying Amount

 Level 1

 Level 2

 Level 3

 Total Fair Value

 Financial Assets:

 Cash and cash equivalents

 $

 $

 $

 -

 $

 -

 $

 Held-to-maturity securities

 844,953

 -

 661,167

 42,534

 703,701

 -

 -

 Loans and leases, net

 3,445,476

 -

 -

 3,335,042

 3,335,042

 Bank-owned life insurance

 73,038

 73,038

 -

 -

 73,038

 Financial Liabilities:

 $

 4,759,269

 $

 -

 $

 4,427,869

 $

 323,572

 $

 4,751,441

 -

 12,211

 -

 12,211

 Note 12—Commitments and Contingencies

 In the normal course of business, the Company enters into financial instruments with off balance sheet risk in order to meet the financing needs of its customers and to reduce its
 own exposure to fluctuations in interest rates. These instruments include commitments to extend credit, letters of credit, and other types of financial guarantees. The Company had the following off balance sheet commitments as of the dates indicated.

 2023

 2022

 Commitments to extend credit, including
 unsecured commitments of $ 19,858 and $ 20,401 as of December 31, 2023 and 2022, respectively

 $

 1,150,142

 $

 1,141,036

 Stand-by letters of credit, including unsecured commitments of $ 7,010 and $ 7,954 as of December 31, 2023 and 2022, respectively

 16,858

 17,138

 The Company's exposure to credit loss in the event of nonperformance by the other party with regard to standby letters of credit, undisbursed loan commitments, and financial guarantees is represented by the contractual notional
 amount of those instruments. Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. The Company uses the same credit policies in making commitments and
 conditional obligations as it does for recorded balance sheet items. The Company may or may not require collateral or other security to support financial instruments with credit risk. Evaluations of each customer's creditworthiness are performed on
 a case-by-case basis. The estimated exposure to loss from these commitments is included in the reserve for unfunded loan commitments, which amounted to $ 3.7
 million and $ 2.1 million for the years ended December 31, 2023 and 2022, respectively.

 Standby letters of credit are conditional commitments issued by the Company to guarantee performance of or payment for a customer to a third-party. Outstanding standby letters of
 credit have maturity dates ranging from 1 to 60 months with final expiration in August 2028. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee.

 The Company has commitments to fund investments in LIHTC partnerships and limited liability companies. At December 31, 2023 and 2022, the balance of the investments in LIHTC was $ 36.5 million
 and $ 37.3 million, respectively. These balances are reflected in the other assets line on the consolidated balance sheets. Total
 unfunded commitments related to the investments in LIHTC totaled $15.5 million and $ 19.7 million
 at December 31, 2023 and 2022, respectively. The Company expects to fulfill these commitments through 2039.

 Additionally, during the years ended December 31, 2023 and 2022, the Company recognized tax credits from its investments in LIHTC of $ 3.60 million and $ 3.05 million,
 respectively.

 In the ordinary course of business, the Company becomes involved in litigation arising out of its normal business activities. Management, after consultation with legal counsel,
 believes that the ultimate liability, if any, resulting from the disposition of such claims would not be material in relation to the financial position of the Company.

 The Company may be required to maintain average reserves on deposit with the FRB primarily based on deposits outstanding. Reserve requirements are offset by the Company's vault cash
 and deposit balances maintained with the FRB.

 Note 13 — Leases

 Lessee – Operating Leases

 Operating leases in which we are the
 lessee are recorded as operating lease right-of-use ("ROU") assets and operating lease liabilities, included in other assets and other liabilities, respectively, on our consolidated statements of financial condition. We do not currently have any significant finance leases in
 which we are the lessee.

 Operating lease ROU assets represent
 our right to use an underlying asset during the lease term and operating lease liabilities represent our obligation to make lease payments arising from the lease. ROU assets and operating lease liabilities are recognized at lease commencement based
 on the present value of the remaining lease payments using a discount rate that represents our incremental borrowing rate at the lease commencement date. ROU assets are further adjusted for lease incentives. Operating lease expense, which is
 comprised of amortization of the ROU asset and the implicit interest accreted on the operating lease liability, is recognized on a straight-line basis over the lease term, and is recorded net in occupancy expense in the consolidated statements of
 income.

 Our leases relate primarily to office
 space and bank branches with remaining lease terms of generally nine months to 8 years. Certain lease arrangements contain extension options that typically range from 5
 to 10 years at the then fair market rental rates. ASC 842 requires lessees to evaluate whether option periods, if available, will be
 exercised in order to determine the full life of the lease. The Company used the first option period, unless it is a relatively new lease that has a long initial lease term or other extenuating circumstances.

 As of December 31, 2023, operating
 lease ROU assets and liabilities were $ 2.7 million and $ 2.8 million, respectively. As of December 31, 2022, operating lease ROU assets and liabilities were $ 3.4
 million and $ 3.5 million, respectively. Operating lease expenses totaled $ 737,000, $ 730,000 and $ 739,000 for the years ended December 31, 2023, 2022 and 2021, respectively.

 The table below summarizes the information related to our operating leases:

 (in thousands except for percent and period data)

 2023

 2022

 Cash Paid for Amounts Included in the Measurement of Lease Liabilities

 Operating Cash Flow from Operating Leases

 $

 $

 Weighted-Average Remaining Lease Term - Operating Leases, in Years

 4.62

 5.48

 Weighted-Average Discount Rate - Operating Leases

 2.6

 %

 2.6

 %

 Note 13—Leases — Continued

 The table below summarizes the maturity of remaining lease liability:

 2024

 $

 2025

 2026

 2027

 2028

 2029

 and beyond

 Total lease payments

 2,995

 Discount

 ( 162

)

 Net present value of lease liabilities

 $

 2,833

 As of December 31, 2023, we have no additional operating leases for office space that have not yet commenced or that are anticipated to commence during the first quarter of 2023.

 Lessor – Direct Financing Leases

 The Company is the lessor in direct
 finance lease arrangements. Leases are recorded at the principal balance outstanding, net of unearned income and charge-offs. Interest income is recognized using the interest method. Leases typically have a maturity of three to ten years, and fixed rates that
 are most often tied to Treasury indices with an appropriate spread based on the amount of perceived risk. Credit risks are underwritten using the same credit criteria the Company would use when making an equipment term loan. Residual value risk is
 managed with qualified, independent appraisers that establish the residual values the Company uses in structuring a lease.

 Lease payments due to the Company are
 typically fixed and paid in equal installments over the lease term. Variable lease payments that do not depend on an index or a rate (e.g., property taxes) that are paid directly by the Company are minimal. The majority of property taxes are paid
 directly by the client to third-parties and are not considered part of variable payments and therefore are not recorded by the Company.

 As a lessor, the Company leases
 certain types of agriculture equipment, solar equipment, construction equipment and other equipment to its customers. The Company's net investment in direct financing leases was $ 167.1 million at December 31, 2023 and $ 111.6 million at December 31, 2022.

 Note 14—Income Taxes

 The components of income tax expense (benefit) are as follows:

 2023

 2022

 2021

 Income tax expense / (benefit)

 Current:

 Federal

 $

 23,025

 $

 10,638

 $

 12,595

 State

 10,817

 9,683

 10,270

 Total current expense

 33,842

 20,321

 22,865

 Deferred:

 Federal

 ( 6,546

)

 3,744

 State

 ( 939

)

 Total current deferred benefit

 ( 5,603

)

 4,330

 ( 880

)

 Provision for
 income tax expense

 $

 $

 $

 21,985

 The combined federal and state income tax expense differs from that computed at the federal statutory corporate tax rate as follows:

 2023

 2022

 2021

 Rate

 Rate

 Rate

 Effective income tax rate

 Federal statutory rate

 $

 24,476

 21.00

 %

 $

 20,946

 21.00

 %

 $

 18,548

 21.00

 %

 State taxes, net of Federal income tax benefit

 9,290

 7.97

 %

 8,112

 8.13

 %

 7,370

 8.34

 %

 Low-income housing tax credits

 ( 3,528

)

 ( 3.03

 %)

 ( 3,031

)

 ( 3.04

 %)

 ( 3,116

)

 ( 3.53

 %)

 Compensation expense

 ( 267

)

 ( 0.23

 %)

 ( 578

)

 ( 0.58

 %)

 -

 -

 Bank owned life insurance

 ( 1,338

)

 ( 1.15

 %)

 ( 494

)

 ( 0.49

 %)

 ( 471

)

 ( 0.53

 %)

 Tax-exempt interest income

 ( 470

)

 ( 0.40

 %)

 ( 326

)

 ( 0.32

 %)

 ( 347

)

 ( 0.39

 %)

 Other, net

 0.07

 %

 0.02

 %

 0.00

 %

 Total provision for income tax expense and effective
 tax rate

 $

 24.23

 %

 $

 24.72

 %

 $

 21,985

 24.89

 %

 Note 14—Income Taxes—Continued

 The nature and components of the Company's net deferred income tax assets are as follows:

 2023

 2022

 Deferred income tax assets:

 Allowance for credit losses

 $

 23,386

 $

 20,508

 Deferred compensation

 21,562

 20,564

 Unrealized losses on debt securities

 5,377

 9,341

 Accrued liabilities

 3,986

 3,832

 Tax credit carry forward

 2,911

 -

 State income taxes

 2,271

 2,034

 Lease liabilities

 1,027

 Acquired net operating losses

 Low-income housing tax investments

 Acquired loans fair valuation

 Acquired OREO fair valuation

 Other

 Total deferred income tax assets

 61,483

 58,673

 Deferred income tax liabilities:

 Commercial leasing

 $

 ( 16,017

)

 $

 ( 21,204

)

 Premises and equipment

 ( 1,740

)

 ( 1,940

)

 Deferred loan and lease costs

 ( 1,000

)

 ( 1,105

)

 Right of use leasing asset

 ( 802

)

 ( 996

)

 Core deposit intangible asset

 ( 661

)

 ( 830

)

 Accretion on investment securities

 ( 659

)

 ( 547

)

 FHLB dividends

 ( 348

)

 ( 348

)

 Other

 ( 225

)

 ( 156

)

 Prepaid assets

 ( 52

)

 ( 40

)

 Total deferred income tax liabilities

 ( 21,504

)

 ( 27,166

)

 Net deferred income tax assets

 $

 39,979

 $

 31,507

 The Company believes, based on available information, that more likely than not, the net deferred income tax asset will be realized in the
 normal course of operations. Accordingly, no valuation allowance has been recorded at December 31, 2023 and 2022. The increase in net
 deferred income tax assets of $ 8.5 million was primarily due to $ 2.9 million in tax credit carry-forwards and a $ 5.2 million
 decrease in deferred income tax liabilities related to our commercial leasing business.

 The impact of a tax position is recognized in the financial statements if that position is more likely than not of being sustained on
 audit, based on the technical merits of the position. As of December 31, 2023 and 2022, the Company did no t have any significant
 uncertain tax positions. The Company includes any interest and penalties associated with unrecognized tax benefits within the provision for income taxes. The Company does not expect a material change to the total amount of unrecognized tax benefits
 in the next twelve months.

 The Company files U.S. and state income tax returns in jurisdictions with various statutes of limitations. The 2019 through 2023 tax years remain subject to selection for examination as of December 31, 2023. As of December 31, 2023 and 2022, the Company had net
 operating loss carryovers of $ 1.7 million and $ 1.9
 million, respectively. The Company had $ 2.9 million
 in tax credit carry-forwards as of December 31, 2023, and no tax carry-forward as of December 31, 2022.

 Note

 15—Condensed Financial Statements of Parent Company

 Financial information pertaining only to Farmers and Merchants Bancorp ("FMCB"), on a parent-only basis, is as follows:

 2023

 2022

 Balance Sheets

 Assets

 Cash and cash equivalents

 $

 $

 1,582

 Investment in subsidiaries

 561,521

 495,019

 Other assets

 Total assets

 $

 561,698

 $

 496,905

 Liabilities and shareholders' equity

 $

 $

 Other liabilities

 1,633

 1,287

 Shareholders' equity

 Total liabilities and shareholders' equity

 $

 561,698

 $

 496,905

 2023

 2022

 2021

 Statements of Income

 Dividend and other income from subsidiaries

 $

 33,300

 $

 34,700

 $

 9,900

 Interest and dividends

 Total income

 33,325

 34,714

 9,909

 Reimbursement of expenses from subsidiaries

 Other expenses

 2,321

 2,388

 1,469

 Total expense

 3,026

 3,102

 2,249

 Income before income taxes

 30,299

 31,612

 7,660

 Income tax benefit

 31,186

 32,525

 8,320

 Equity in undistributed net income of subsidiaries

 57,128

 42,565

 58,016

 $

 $

 $

 Note 15—Condensed Financial Statements of Parent Company—Continued

 2023

 2022

 2021

 Statements of Cash Flows

 Cash flows from operating activities:

 $

 $

 $

 Adjustments to reconcile net income to net cash provided by operating activities:

 Equity in undistributed net income of the Bank

 ( 57,128

)

 ( 42,565

)

 ( 58,016

)

 Change in other assets and liabilities

 Net cash provided by operating activities

 31,789

 32,722

 9,059

 Cash flows from investing activities:

 Securities sold or matured

 -

 -

 Net cash used in investing activities

 -

 -

 Cash flows from financing activities:

 Common stock repurchases

 ( 20,355

)

 ( 20,310

)

 -

 Cash dividends paid

 ( 12,886

)

 ( 12,489

)

)

 Net used in financing activities

 ( 33,241

)

 ( 32,799

)

)

 Net change in cash and cash equivalents

 ( 1,452

)

 ( 3,016

)

 Cash and cash equivalents, beginning of year

 1,582

 1,535

 4,551

 Cash and cash equivalents, end of year

 $

 $

 1,582

 $

 1,535

 Item 9.

 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

 None

 Item 9A.

 Controls and Procedures

 Evaluation of Disclosure Controls and Procedures

 An evaluation was carried out under the supervision and with the participation of the Company's management, including the Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO"), of the effectiveness of
 the disclosure controls and procedures (as required by Exchange Act Rules 240.13a-15(b) and 15d-14(a)). Based on that evaluation, the CEO and CFO have concluded that as of the end of the period covered by this Report, the disclosure controls and
 procedures are effective to provide reasonable assurance that information required to be disclosed by the Company in reports that are filed or submitted under the Exchange Act are recorded, processed, summarized and timely reported as provided in
 the SEC's rules and forms.

 REPORT OF MANAGEMENT

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

 The management of Farmers & Merchants Bancorp (the "Company") is responsible for the preparation, integrity, and fair presentation of its published financial statements and all other information presented in
 this annual report. The financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and, as such, include amounts based on informed judgments and estimates made by
 management. In the opinion of management, the financial statements and other information herein present fairly the financial condition and operations of the Company at the dates indicated in conformity with accounting principles generally
 accepted in the United States of America.

 Management is responsible for establishing and maintaining an effective system of internal control over financial reporting. The internal control system is augmented by written policies and procedures and by audits
 performed by an internal audit staff (assisted in certain instances by outside third party audit resources other than the independent registered public accounting firm), which reports to the Audit & Risk Committee of the Board of Directors.
 Internal auditors monitor the operation of the internal and external control system and report findings to management and the Audit & Risk Committee. When appropriate, corrective actions are taken to address identified control deficiencies
 and other opportunities for improving the system. The Audit & Risk Committee provides oversight to the financial reporting process. There are inherent limitations in the effectiveness of any system of internal control, including the
 possibility of human error and circumvention or overriding of controls. Accordingly, even an effective internal control system can provide only reasonable assurance with respect to financial statement preparation. Further, because of changes in
 conditions, the effectiveness of an internal control system may vary over time.

 The Audit & Risk Committee of the Board of Directors is comprised entirely of outside directors who are independent of the Company's management. The Audit & Risk Committee is responsible for the selection
 of the independent registered public accounting firm. It meets periodically with management, the independent auditors and the internal auditors to ensure that they are carrying out their responsibilities.

 The Audit & Risk Committee is also responsible for performing an oversight role by reviewing and monitoring the financial, accounting, and auditing procedures of the Company in addition to reviewing the
 Company's financial reports. The independent auditors and the internal auditors have full and free access to the Audit & Risk Committee, with or without the presence of management, to discuss the adequacy of the internal control structure for
 financial reporting and any other matters, which they believe should be brought to the attention of the Committee.

 /s/ Kent A. Steinwert

 /s/ Bart R. Olson

 Kent A. Steinwert

 Bart R. Olson

 Chairman, President, and Chief Executive Officer

 Executive Vice President and Chief Financial Officer

 MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

 Farmers & Merchants Bancorp management is responsible for establishing and maintaining effective internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities
 Exchange Act of 1934, as amended. The Company's internal control over financial reporting is designed by, or under the supervision of the Company's Chief Executive Officer and Chief Financial Officer and effected by management, and other
 personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of
 America ("GAAP"). The Company's internal control over financial reporting includes those policies and procedures that:

 (1)

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

 (2)

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

 (3)

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

 There are inherent limitations in any internal control, no matter how well designed and misstatements due to error or fraud may occur and not be detected, including the possibility of circumvention or overriding of
 controls. Accordingly, even an effective internal control system can provide only reasonable assurance with respect to financial statement preparation. Further, because of changes in conditions, the effectiveness of an internal control system may
 vary over time.

 Management assessed the effectiveness of the internal control structure over financial reporting as of December 31, 2023. This assessment was based on criteria for effective internal control over financial
 reporting set forth by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO"). Based on this assessment, management believes that the Company's internal control over financial reporting is effective as of December 31, 2023.

 The Company's independent registered public accounting firm has audited the consolidated financial statements for the year ended December 31, 2023, has issued an audit report on the Company's internal control over
 financial reporting. Such audit report expresses an unqualified opinion on the effectiveness of the Company's internal control over financial reporting in accordance with the standards of the Public Company Accounting Oversight Board as of
 December 31, 2023 that appears on page 75.

 Changes in Internal Controls

 There have been no material changes in the Company's internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the year ended December 31,
 2023, to which this report relates that have materially affected, or are reasonably likely to materially affect the Company's internal control over financial reporting.

 Item 9B. Other Information

 None

 Item 9C.

 Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

 Not Applicable

 Item 10.

 Directors, Executive Officers and Corporate Governance

 Information regarding "Directors and Executive Officers" is set forth under the headings "Annual Meeting

 Business Matters – Proposal No. 1 – Election of Directors" and "Executive Compensation – Compensation Discussion and Analysis – Executive Officers Who Are Not Directors" of the Company's 2024 Annual Meeting Proxy
 Statement ("Proxy Statement") and is incorporated herein by reference.

 Information regarding "Delinquent Section 16(a) Reports" is set forth under the section "Other Matters – Delinquent Section 16(a) Reports" of the Company's Proxy Statement and is incorporated herein by reference.

 Information regarding the Company's corporate governance and board committees is set forth under the heading "Corporate Governance – Board of Directors Meetings" and " – Committees of the Board" in the Company's
 Proxy Statement and is incorporated herein by reference.

 Consistent with the requirements of the Sarbanes-Oxley Act, the Company has a Code of Conduct applicable to senior financial officers including the principal executive officer, principal financial officer and
 principal accounting officer. The Code of Conduct can be accessed electronically by visiting the Company's website at www.fmbonline.com. The Company intends to satisfy the disclosure requirements under Item 5.05 of Form 8-K regarding
 amendments to and waivers of the Code of Conduct by posting such information on its website, at the address and location specified above.

 Item 11.

 Executive Compensation

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

 Information regarding "Compensation Committee Interlocks and Insider Participation" is set forth under such heading under "Executive Compensation" in the Company's Proxy Statement and is incorporated herein by
 reference.

 Information regarding the "Compensation Committee Report" is set forth under the heading "Report of the Personnel Committee of the Board of Directors on Executive Compensation" under "Executive Compensation" in
 the Company's Proxy Statement and is incorporated herein by reference.

 Item 12.

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

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

 Information regarding "Equity Compensation Plan Information" is set forth under the heading "Executive Compensation – Qualified and Non-Qualified Retirement Programs" of the Company's Proxy Statement and is
 incorporated herein by reference.

 Item 13.

 Certain Relationships and Related Transactions, and Director Independence

 Information regarding "Certain Relationships and Related Transactions, and Director Independence" is set forth under the heading "Corporate Governance – Certain Relationships and Related Person Transactions" and
 " – Director Independence" of the Company's Proxy Statement and is incorporated herein by reference.

 Item 14.

 Principal Accounting Fees and Services

 Information regarding "Principal Accounting Fees and Services" is set forth under the heading "Fees and Services of Independent Registered Public Accounting Firm" of the Company's Proxy Statement and is incorporated herein by reference.

 Item 15.

 Exhibits and Financial Statement Schedules

 List of Financial Statements and Financial Statement Schedules

 (a)

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

 (1)

 Financial Statements and

 (2)

 Financial Statement schedules required to be filed by Item 8 of this Form 10-K.

 (3)

 The following exhibits are required by Item 601 of Regulation S-K and are included as part of this Form 10-K:

 Exhibit

 Number

 Description

 3.1

 Amended and Restated Certificate of Incorporation filed on Registrant's Form 10-K for the year ended
 December 31, 2022, and incorporated herein by reference.

 3.2

 Amended and Restated By-Laws filed on Registrant's Form 10-K for the year ended December 31, 2022,
 and incorporated herein by reference.

 3.3

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

 4.1

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

 4.2

 Amendment No. 1 to Rights Agreement between Farmers & Merchants Bancorp and Computershare Trust, N.A., as Rights
 Agent, dated as of February 18, 2016, incorporated herein by reference to Exhibit 4.2 of the Registrant's Form 8-A/A filed on February 19, 2016.

 4.3

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

 10.1

 Amended and Restated Employment Agreement effective August 1, 2019, between Farmers & Merchants Bank of Central
 California and Kent A. Steinwert, filed on Registrant's Form 10-Q for the quarter ended June 30, 2019, is incorporated herein by reference.

 10.3

 Amended and Restated Employment Agreement effective August 1, 2019, between Farmers & Merchants Bank of Central
 California and Deborah E. Skinner, filed on Registrant's Form 10-Q for the quarter ended June 30, 2019, is incorporated herein by reference.

 10.10

 Amended and Restated Employment Agreement effective August 1, 2019, between Farmers & Merchants Bank of Central
 California and Ryan J. Misasi, filed on Registrant's Form 10-Q for the quarter ended June 30, 2019, is incorporated herein by reference.

 10.11

 Employment Agreement effective May 1, 2017, between Farmers & Merchants Bank of Central California and David M.
 Zitterow, filed on the Registrant's Current Report on Form 8-K dated June 30, 2017, is incorporated herein by reference.

 10.12

 Employment Agreement effective August 1, 2022, between Farmers & Merchants Bank of Central
 California and Kyle Koelbel, filed on the Registrant's Form 10-Q for the quarter ended September 30, 2022, is incorporated herein by reference.

 10.15

 Executive Retirement Plan – Performance Component as amended on
 November 5, 2010, filed on Registrant's Form 10-Q for the period ended September 30, 2010, is incorporated herein by reference.

 10.16

 Executive Retirement Plan – Retention Component as amended on November 5, 2010, filed on Registrant's Form 10-Q
 for the period ended September 30, 2010, is incorporated herein by reference.

 10.17

 Executive Retirement Plan – Salary Component, amended and restated on November 29, 2014, filed on Registrant's
 Form 10-K for the year ended December 31, 2014, is incorporated herein by reference.

 10.19

 Executive Retirement Plan – Equity Component, amended and restated on November 29, 2014, filed on Registrant's
 Form 10-K for the year ended December 31, 2014, is incorporated herein by reference.

 10.20

 Senior Management Retention Plan, amended and restated on November 29, 2014, filed on Registrant's Form 10-K
 for the year ended December 31, 2014, is incorporated herein by reference.

 10.21

 Employment Agreement effective March 27, 2023, between Farmers & Merchants Bank of Central
 California and Bart R. Olson, filed on Registrant's Form 10-Q for the quarter ended March 31, 2023, is incorporated herein by reference.

 10.22

 Employment Agreement effective April 1, 2023, between Farmers & Merchants Bank of Central
 California and John W. Weubbe, filed on Registrant's Form 10-Q for the quarter ended March 31, 2023, is incorporated herein by reference.

 Subsidiaries of the Registrant, filed on Registrant's Form 10-K for the year ended December 31, 2003,
 is incorporated herein by reference.

 31(a)

 Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*

 31(b)

 Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*

 Certification of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*

 101.INS

 101.SCH

 101.CAL

 101.DEF

 101.LAB

 101.PRE

 *Filed herewith

 Item 16.

 Form 10-K Summary

 None

 SIGNATURES

 Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on
 March 14, 2024.

 (Registrant)

 /s/ Kent A. Steinwert

 Kent A. Steinwert

 Director, Chairman, President and Chief Executive Officer

 (Principal Executive Officer)

 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below on March 14, 2024, by the following persons on behalf of the registrant and in the capacities indicated.

 /s/ Kent A. Steinwert

 Director, Chairman, President and Chief Executive Officer

 Kent A. Steinwert

 (Principal Executive Officer)

 /s/ Bart R. Olson

 Executive Vice President and Chief Financial Officer

 Bart R. Olson

 (Principal Financial and Accounting Officer)

 /s/ Edward Corum, Jr.

 Edward Corum, Jr.

 /s/ Stephenson K. Green

 Stephenson K. Green

 /s/ Gary Long

 Gary Long

 /s/ Kevin Sanguinetti

 Kevin Sanguinetti

 /s/ Calvin Suess

 Calvin Suess

 /s/ Craig James

 Craig James