8-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

May 12, 2006

(Date of earliest event reported)

Farmers & Merchants Bancorp

(Exact name of registrant as specified in its charter)

Delaware

(State or other jurisdiction of incorporation)

000 - 26099	94-3327828
(Commission File Number)	(IRS Employer Identification No.)

111 West Pine Street, Lodi, California 95240

(Address of principal executive offices) (Zip Code)

(209) 367-2300

(Registrant’s telephone number, including area code)

Not Applicable

(Former name or former address, if changes since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(C))

Item 8.01 Other Events

On May 12, 2006, Farmers & Merchants Bancorp issued a press release announcing the Board of Directors’ decision regarding cash and stock dividends, a copy of which is included as Exhibit 99.1 and incorporated herein by reference.

Item 9.01 Financial Statements and Exhibits

(c) Exhibits:

99.1 Press release announcing the Board of Directors of Farmers & Merchants Bancorp’s decision regarding cash and stock dividends.

SIGNATURE

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

FARMERS & MERCHANTS BANCORP
By	/s/ Stephen W. Haley
	Stephen W. Haley
	Executive Vice President
	& Chief Financial Officer

Date: May 12, 2006

EX-99.1

EXHIBIT 99.1

FARMERS & MERCHANTS BANCORP ANNOUNCES A

17.2% INCREASE IN THE MID-YEAR CASH

DIVIDEND PER SHARE

The Board of Directors of Farmers & Merchants Bancorp has declared a mid-year cash dividend of $3.75 per share, a 17.2% increase over the $3.20 per share paid in June of 2005. The cash dividend will be paid on June 30, 2006, to shareholders of record on May 22, 2006. The total mid-year 2006 cash dividend will be $3,070,000 compared to $2,659,158 paid in 2005. Kent Steinwert, President and C.E.O. noted, “Farmers & Merchants Bancorp’s strong first quarter financial performance represented the 33^rd consecutive quarter that net income exceeded the same quarter the prior year. Management and the Board are extremely pleased with year-to-date results, and the Board unanimously approved the cash dividend. This is the ninth consecutive year that the mid-year cash dividend has been increased.”

Farmers & Merchants Bancorp reported net income of $4,937,000 for the quarter ending March 31, 2006. Earnings per share of common stock outstanding for the first quarter were $6.00, up 12.6% from the first quarter of the prior year. In addition, loans outstanding grew 11.8%, total core deposits, excluding public deposits, increased 8.0%, and total average assets were $1,329,923,000 up 9.4% over the first quarter of 2005. Return on average assets for the quarter was 1.48%, and return on average equity was 15.82%, an improvement of 78 basis points over the first quarter of the prior year. The Company’s loan quality has remained extremely high with non-performing assets as of March 31, 2006 totaling only 0.04% of loans. In addition, the Company’s loan loss reserve totaled $18,258,000 which represents 1.9% of loans.

Additionally, the Board of Directors decided that it will not be issuing a stock dividend in 2006. The Board of Directors emphasized that this decision will not influence the Board’s decisions regarding future cash dividends. President Steinwert observed, “In 1975 the Board began issuing stock dividends in order to increase the number of shares available in the marketplace, maintain an affordable share price, and satisfy market demand for the stock. As of December 31, 2005, the Company had over 820,000 shares outstanding. At this level, market trades appear to be occurring in an orderly and timely manner, providing shareholders with satisfactory liquidity.”

Although stock dividends achieve the same results as stock splits, just on a smaller scale, the required accounting for a stock dividend is very different. Under generally accepted accounting principles, the accounting for stock dividends requires that Retained Earnings be decreased in an amount equal to the market value of the shares being issued, and Additional Paid-In Capital be increased by a like amount. Therefore, although the Company’s total Shareholders’ Equity is unaffected, stock dividends have the undesirable long-term impact of limiting the level of Retained Earnings out of which cash dividends are paid. In the future, should the Board of Directors determine that it is beneficial to increase the number of shares outstanding, it will consider all options available to achieve this purpose.

Farmers & Merchants Bancorp is the parent of Farmers & Merchants Bank of Central California, also known as F&M Bank. Founded in 1916, and celebrating its 90^th anniversary, Farmers & Merchants Bank is a full service community bank with over $1.3 billion in assets. F&M Bank proudly serves California's Great Central Valley through 19 branch offices conveniently located from Sacramento to Turlock.

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