10-Q 1 ef20012434_10q.htm 10-Q
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 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

FARMERS & MERCHANTS BANCORP
(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 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 is a shell company (as defined in Rule 12b-2 of the Exchange Act). 
Yes ☐  No ☒

As of October 31, 2023, the registrant had 751,095 shares of common stock $0.01 par value per share, outstanding.

FARMERS & MERCHANTS BANCORP
FORM 10-Q

TABLE OF CONTENTS
PART I. - FINANCIAL INFORMATION
Page
 
 
 
 
 
Item 1 - Financial Statements
 
 
 
3
 
 
4
 
 
5
 
 
6
 
 
7
 
 
8
 
 
 
 
 
28
 
 
 
 
 
 50
 
 
 
 
 
52
 
 
 
 
PART II. - OTHER INFORMATION
 
 
 
 
 
 
53
 
Item 1A – Risk Factors
53
 
53
 
54
 
54
 
54
 
Item 6 – Exhibits
54
 
55

2
PART 1. FINANCIAL INFORMATION

Item 1.
Financial Statements

FARMERS & MERCHANTS BANCORP 
UNAUDITED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except share and per share amounts)
  
September 30,
2023
    
December 31,
2022
  
ASSETS
            
Cash and due from banks
  
$
70,622
    
$
73,358
  
Interest bearing deposits with banks
    
597,739
      
514,899
  
Total cash and cash equivalents
    
668,361
      
588,257
  
Securities available-for-sale, amortized cost $135,125 and $183,171 respectively
    
106,493
      
152,864
  
Securities held-to-maturity, fair value $636,623 and $688,393 respectively
    
826,015
      
845,346
  
Allowance for credit losses - securities held-to-maturity
     (450 )     (393 )
Total investment securities
    
932,058
      
997,817
  
Non-marketable securities
    
15,549
      
15,549
  
Loans and leases held-for-investment, net of unearned income
    
3,557,203
      
3,512,361
  
Allowance for credit losses - loans and leases
    
(74,159
)
    
(66,885
)
Loans held-for-investment, net
    
3,483,044
      
3,445,476
  
Bank-owned life insurance
    
67,094
      
73,038
  
Premises and equipment, net
    
52,091
      
49,476
  
Deferred income tax assets
    
32,306
      
31,507
  
Accrued interest receivable
    
25,804
      
21,602
  
Goodwill
    
11,183
      
11,183
  
Other intangibles
    
2,380
      
2,809
  
Other real estate owned
    
873
      
873
  
Other assets
    
84,632
      
89,812
  
TOTAL ASSETS
  
$
5,375,375
    
$
5,327,399
  
                 
LIABILITIES AND SHAREHOLDERS’ EQUITY
                
Deposits:
                
Non-interest bearing
  
$
1,470,590
    
$
1,758,793
  
Interest bearing:
                
Demand
    
985,408
      
1,125,014
  
Savings and money market
    
1,670,688
      
1,544,062
  
Certificates of deposit
    
622,081
      
331,400
  
Total interest bearing
    
3,278,177
      
3,000,476
  
Total deposits
    
4,748,767
      
4,759,269
  
Subordinated debentures
    
10,310
      
10,310
  
Interest payable and other liabilities
    
85,675
      
72,512
  
TOTAL LIABILITIES
    
4,844,752
      
4,842,091
  
                 
SHAREHOLDERS’ EQUITY
                
Preferred shares, no par value, 1,000,000 shares authorized and, none issued or outstanding
    
-
      
-
  
Common shares, $0.01 par value, 7,500,000 authorized 752,013 and 768,337 outstanding at September 30, 2023 and December 31, 2022, respectively
    
7
      
8
  
Additional paid-in capital
    
40,813
      
57,206
  
Retained earnings
    
510,535
      
449,932
  
Accumulated other comprehensive (loss), net of taxes
    
(20,732
)
    
(21,838
)
TOTAL SHAREHOLDERS’ EQUITY
    
530,623
      
485,308
  
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
  
$
5,375,375
    
$
5,327,399
  

See accompanying notes to the unaudited consolidated financial statements.

3
FARMERS & MERCHANTS BANCORP
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME


 
  
Three Months Ended
September 30,
    
Nine Months Ended
September 30,
  
(Dollars in thousands, except share and per share amounts)  
2023
    
2022
    
2023
    
2022
  
Interest income
                        
Interest and fees on loans and leases
  
$
52,153
    
$
41,868
    
$
149,851
    
$
117,871
  
Interest and dividends on investment securities
    
5,485
      
5,686
      
16,593
      
16,697
  
Interest on deposits with others
     8,075       4,159       19,918       5,934  
Total interest income
    
65,713
      
51,713
      
186,362
      
140,502
  
Interest expense
                                
Deposits
    
12,051
      
1,122
      
24,156
      
2,798
  
Subordinated debentures
    
221
      
134
      
621
      
319
  
Total interest expense
    
12,272
      
1,256
      
24,777
      
3,117
  
Net interest income
    
53,441
      
50,457
      
161,585
      
137,385
  
Provision for credit losses
    
3,000
      
1,500
      
7,057
      
3,000
  
Net interest income after provision for credit losses
    
50,441
      
48,957
      
154,528
      
134,385
  
Non-interest income
                                
Card processing
     1,693       1,791       4,996       5,375  
Service charges on deposit accounts
    
722
      
638
      
2,046
      
2,318
  
Increase in cash surrender value of BOLI
    
512
      
566
      
1,462
      
1,668
  
Gain on BOLI death benefit
     -       -       4,346       -  
Net loss on sale of securities available-for-sale
    
-
      
(2,987
)
    
(5,686
)
    
(2,985
)
Net (loss)/gain on deferred compensation benefits
    
(304
)
    
352
      
1,894
      
(227
)
Other
    
983
      
1,199
      
3,455
      
3,234
  
Total non-interest income
    
3,606
      
1,559
      
12,513
      
9,383
  
Non-interest expense
                                
Salaries and employee benefits
    
17,172
      
15,994
      
54,693
      
49,181
  
Net (loss)/gain on deferred compensation benefits
    
(304
)
    
352
      
1,894
      
(227
)
Data processing
    
1,254
      
1,250
      
3,821
      
3,698
  
Occupancy
    1,191       1,196       3,599       3,500  
FDIC insurance
     582       366       1,785       1,076  
Marketing
    
440
      
303
      
1,335
      
959
  
Legal
    
256
      
49
      
780
      
733
  
Other
    
3,877
      
4,865
      
11,566
      
12,274
  
Total non-interest expense
    
24,468
      
24,375
      
79,473
      
71,194
  
INCOME BEFORE INCOME TAXES
    
29,579
      
26,141
      
87,568
      
72,574
  
Income tax expense
    
7,545
      
6,605
      
20,679
      
17,537
  
NET INCOME
  
$
22,034
    
$
19,536
    
$
66,889
    
$
55,037
  
                                 
Earnings per common share:
                                
Basic
   $ 29.23     $ 25.20     $ 88.06     $ 70.47  
Diluted
   $ 29.23     $ 25.20     $ 88.06     $ 70.47  
                                 
Weighted average number of common shares                                
Basic
     753,780       775,109       759,600       780,988  
Diluted
     753,780       775,109       759,600       780,988  

See accompanying notes to the unaudited consolidated financial statements.

4
FARMERS & MERCHANTS BANCORP 
UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME


 
  
Three Months Ended
September 30,
    
Nine Months Ended
September 30,
  
(Dollars in thousands)  
2023
    
2022
    
2023
    
2022
  
Net income
  
$
22,034
    
$
19,536
    
$
66,889
    
$
55,037
  
Other comprehensive income
                                
Unrealized (losses) on available-for-sale securities
    
(5,181
)
    
(12,378
)
    
(4,010
)
    
(39,677
)
Reclassification adjustment for losses on available-for-sale securities
    
-
      
2,987
      
5,685
      
2,985
  
Amortization of unrealized loss on securities transferred to held-to-maturity
    
(28
)
    
(52
)
    
(105
)
    
(193
)
Net unrealized (losses)/gains on available-for-sale securities
     (5,209 )     (9,443 )     1,570       (36,885 )
Income tax benefit/(expense)
    
1,540
      
2,792
      
(464
)
    
10,905
  
Other comprehensive (loss)/income, net of tax
    
(3,669
)
    
(6,651
)
    
1,106
      
(25,980
)
Total comprehensive income
  
$
18,365
    
$
12,885
    
$
67,995
    
$
29,057
  

See accompanying notes to the unaudited consolidated financial statements.

5
FARMERS & MERCHANTS BANCORP
UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

    For the three and nine months ended September 30, 2023 and 2022
  
(Dollars in thousands, except share amounts)
  
Common
Shares
     Amount
    
Additional
Paid-In
Capital
    
Retained
Earnings
    
Accumulated
Other
Comprehensive
(Loss)/Income
    
Total
  
Balance as of June 30, 2023
    
754,523
    
$
8
    
$
43,263
    
$
488,501
    
$
(17,063
)
  
$
514,709
  
Net income
     -       -      
-
      
22,034
      
-
      
22,034
  
Other comprehensive loss, net of tax
     -      
-
      
-
      
-
      
(3,669
)
    
(3,669
)
Repurchase of common stock     (2,510 )     (1 )     (2,450 )     -       -       (2,451 )
Balance as of September 30, 2023
    
752,013
    
$
7
    
$
40,813
    
$
510,535
    
$
(20,732
)
  
$
530,623
  
                                                 
Balance as of June 30, 2022
    
777,190
    
$
8
    
$
65,671
    
$
416,722
    
$
(21,048
)
  
$
461,353
  
Net income
     -       -      
-
      
19,536
      
-
      
19,536
  
Other comprehensive loss, net of tax
     -      
-
      
-
      
-
      
(6,651
)
    
(6,651
)
Repurchase of common stock
     (6,368 )     -       (6,060 )     -       -       (6,060 )
Balance as of September 30, 2022
    
770,822
    
$
8
    
$
59,611
    
$
436,258
    
$
(27,699
)
  
$
468,178
  

(Dollars in thousands, except share amounts)
  
Common
Shares
     Amount
    
Additional
Paid-In
Capital
    
Retained
Earnings
    
Accumulated
Other
Comprehensive
(Loss)/Income
    
Total
  
Balance as of December 31, 2022
    
768,337
    
$
8
    
$
57,206
    
$
449,932
    
$
(21,838
)
  
$
485,308
  
Net income
     -       -      
-
      
66,889
      
-
      
66,889
  
Other comprehensive gain, net of tax
     -      
-
      
-
      
-
      
1,106
      
1,106
  
Cash dividends declared ($8.30 per share)
     -       -       -       (6,286 )     -       (6,286 )
Repurchase of common stock     (16,324 )     (1 )     (16,393 )     -       -       (16,394 )
Balance as of September 30, 2023
    
752,013
    
$
7
    
$
40,813
    
$
510,535
    
$
(20,732
)
  
$
530,623
  
                                                 
Balance as of December 31, 2021
    
789,646
    
$
8
    
$
77,516
    
$
387,331
    
$
(1,719
)
  
$
463,136
  
Net income
     -       -      
-
      
55,037
      
-
      
55,037
  
Other comprehensive loss, net of tax
     -      
-
      
-
      
-
      
(25,980
)
    
(25,980
)
Cash dividends declared ($7.85 per share)
     -       -       -       (6,110 )     -       (6,110 )
Repurchase of common stock
     (18,824 )     -       (17,905 )     -       -       (17,905 )
Balance as of September 30, 2022
    
770,822
    
$
8
    
$
59,611
    
$
436,258
    
$
(27,699
)
  
$
468,178
  

See accompanying notes to the unaudited consolidated financial statements.

6
FARMERS & MERCHANTS BANCORP
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
   
Nine Months Ended
September 30,
  
(Dollars in thousands)
  
2023
    
2022
  
Cash flows from operating activities:
            
Net income
  
$
66,889
    
$
55,037
  
Adjustments to reconcile net income to net cash provided by operating activities:
                
Provision for credit losses
    
7,057
      
3,000
  
Depreciation and amortization
    
1,833
      
1,849
  
Net amortization of securities premiums and discounts
    
11
      
341
  
Increase in cash surrender value of BOLI
    
(1,462
)
    
(1,668
)
Gain on BOLI death benefit
    (4,346 )     -  
(Increase)/decrease in deferred income taxes, net
    
(1,994
)
    
2,356
  
Loss on sale of securities available-for-sale
    
5,686
      
2,985
  
Net changes in:
                
Other assets
    
2,368
      
(2,362
)
Other liabilities
    
18,297
      
18,134
  
Net cash provided by operating activities
    
94,339
      
79,672
  
Cash flows from investing activities:
                
Net change in loans and leases held-for-investment
    
(59,022
)
    
(86,401
)
Purchase of available-for-sale securities
    
(4,515
)
    
(10,135
)
Purchase of held-to-maturity securities
    
(3,814
)
    
(168,634
)
Proceeds from sales, maturities, calls and pay downs of available-for-sale securities
    
46,751
      
62,979
  
Proceeds from maturities, calls and pay downs of held-to-maturity securities
    
37,524
      
52,884
  
Purchase of premises and equipment
    
(4,493
)
    
(3,318
)
Purchase of other investments
    
(5,263
)
    
(5,300
)
Proceeds from bank-owned life insurance     11,752       513  
Proceeds from sale of assets
    
27
      
73
  
Net cash provided by (used in) investing activities
    
18,947
      
(157,339
)
Cash flows from financing activities:
                
Net (decrease) increase in deposits
    
(10,502
)
    
269,105
  
Cash dividends paid
     (6,286 )     (6,110 )
Net cash used in share repurchase of common stock
    
(16,394
)
    
(17,905
)
Net cash (used in) provided by financing activities
    
(33,182
)
    
245,090
  
Net change in cash and cash equivalents
    
80,104
      
167,423
  
Cash and cash equivalents, beginning of period
    
588,257
      
715,460
  
Cash and cash equivalents, end of period
  
$
668,361
    
$
882,883
  
                 
Supplemental disclosures of cash flow information:
                
Cash paid for interest
  
$
18,664
    
$
3,832
  
Income taxes paid
   $ 16     $ 11,451  
                 
Supplemental disclosures of non-cash transactions:
                
Net change in unrealized gain/(losses) on securities available-for-sale   $ 1,676     $ (36,692 )

See accompanying notes to the unaudited consolidated financial statements.

7
FARMERS & MERCHANTS BANCORP
NOTES TO UNAUDITED CONSOLIDATED STATEMENTS

Note 1—Basis of Presentation and Significant Accounting Policies

The accompanying unaudited condensed consolidated financial statements include the accounts of Farmers & Merchants Bancorp (“FMCB” or “Bancorp”), a bank holding company incorporated in the State of Delaware and its wholly owned subsidiary, Farmers & Merchants Bank of Central California (“F&M Bank” or the “Bank”) collectively (the “Company”).

These unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X as promulgated by the Securities and Exchange Commission (“SEC”). In preparing these financial statements, the Company has evaluated events and transactions subsequent to September 30, 2023 for potential recognition or disclosure. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the financial position and results of operations for the periods presented have been included. Certain information and note disclosures have been condensed or omitted pursuant to the rules and regulations of the SEC and the accounting standards for interim financial statements. All significant intercompany transactions and balances have been eliminated.

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 the Company’s accounting policies, by their nature, are inherently subject to estimation techniques, valuation assumptions and other subjective assessments. In particular, management has identified several accounting policies that, due to the judgments, estimates and assumptions inherent in those policies, are significant to an understanding of Bank’s financial statements. These policies relate to: (i) the methodology for the recognition of interest income; (ii) the determination of the provision and allowance for credit losses; (iii) the valuation of financial assets and liabilities recorded at fair value; (iv) the valuation of intangibles, such as goodwill and core deposit intangibles (“CDI”); (v) the valuation of other real estate owned (“OREO”); and (vi) the valuation or recognition of deferred tax assets and liabilities. These policies and judgments, estimates and assumptions are described in greater detail in subsequent notes to the Unaudited Consolidated Financial Statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations, Summary of Critical Accounting Policies and Estimates, in our Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on March 15, 2023 and Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations Summary of Critical Accounting Policies and Estimates included in this Quarterly Report on Form 10-Q.

The information included in this Form 10-Q should be read in conjunction with our 2022 Form 10-K. Interim results are not necessarily indicative of results for a full year or any other interim period.

Accounting Standards Adopted in 2023
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 indicated 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 3, Loans and Leases.

8

FARMERS & MERCHANTS BANCORP
NOTES TO UNAUDITED CONSOLIDATED STATEMENTS (Continued)
Note 1—Basis of Presentation and Significant Accounting Policies—Continued

Accounting Standards Pending Adoption
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 adoption of this ASU is not expected to have 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 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 adoption of this ASU is not expected to have 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 does not expect the adoption of ASU 2023-03 to have a material impact on its consolidated financial statements.

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 evaluating the impacts of this ASU and has not yet determined whether this ASU will have a material impact on its consolidated financial statements.
 
9

FARMERS & MERCHANTS BANCORP
NOTES TO UNAUDITED CONSOLIDATED STATEMENTS (Continued)

Note 2—Investment Securities

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

Available-for-Sale Securities
 
     Gross Unrealized    
 
(Dollars in thousands)
  
Amortized
Cost
    
Gains
    
Losses
    
Fair Value
  
As of September 30, 2023                                
U.S. Government-sponsored securities
   $
3,614
     $
15
     $
20
     $
3,609
  
Mortgage-backed securities (1)
    
120,588
      
7
      
28,477
      
92,118
  
Collateralized mortgage obligations (1)
    579       -       16       563  
Corporate securities
    
10,034
      
-
      
141
      
9,893
  
Other
    
310
      
-
      
-
      
310
  
Total available-for-sale securities
  
$
135,125
    
$
22
    
$
28,654
    
$
106,493
  

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

Available-for-Sale Securities  

   
Gross Unrealized
    

 
(Dollars in thousands)
  
Amortized
Cost
    
Gains
    
Losses
    
Fair Value
  
As of December 31, 2022