Washington, D.C. 20549

                                    FORM 10-Q

[X]  Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
     Act of 1934

                  For the quarterly period ended June 30, 2008


[ ]  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 0-14492

                        FARMERS & MERCHANTS BANCORP, INC.
             (Exact name of registrant as specified in its charter)

              OHIO                                                34-1469491
(State or other jurisdiction of                                (I.R.S Employer
 incorporation or organization)                              Identification No.)

307-11 North Defiance Street, Archbold, Ohio                       43502
(Address of principal executive offices)                         (Zip Code)

                                 (419) 446-2501
               Registrant's telephone number, including area code

   (Former name, former address and former fiscal year, if changed since last

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]

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

Large accelerated   Accelerated          Non-accelerated       Smaller reporting
     filer [ ]       filer [X]               filer [ ]            company [ ]
                                  (Do not check if a smaller
                                       reporting company)

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

Indicate the number of shares of each of the issuers classes of common stock, as
of the latest practicable date:

Common Stock, No Par Value               4,835,255
--------------------------   -------------------------------
   Class                     Outstanding as of July 30, 2008

                             Washington, D.C. 20549
                                    FORM 10Q

                        FARMERS & MERCHANTS BANCORP, INC.

Form 10-Q Items


Item 1.     Financial Statements (Unaudited)
            Condensed Consolidated Balance Sheets-
               June 30, 2008 and December 31, 2007                              1
            Condensed Consolidated Statements of Net Income-
               Three and Six Months Ended June 30, 2008 and June 30, 2007       2
            Condensed Consolidated Statements of Cash Flows-
               Six Months Ended June 30, 2008 and June 30, 2007                 3
            Notes to Condensed Financial Statements                             4
Item 2.     Management's Discussion and Analysis of Financial Condition
               and Results of Operations                                      4-8
Item 3.     Qualitative and Quantitative Disclosures About Market Risk          9
Item 4.     Controls and Procedures                                            10
Item 1.     Legal Proceedings                                                  10
Item 1A.    Risk Factors                                                       10
Item 2.     Unregistered Sales of Equity Securities and Use of Proceeds        10
Item 3.     Defaults Upon Senior Securities                                    10
Item 4.     Submission of Matters to a Vote of Security Holders             10-11
Item 5.     Other Information                                                  11
Item 6.     Exhibits                                                           11
Signatures                                                                     12
Exhibit 31. Certifications Under Section 302                                13-14
Exhibit 32. Certifications Under Section 906                                   15


                        FARMERS & MERCHANTS BANCORP, INC.
                            (in thousands of dollars)

                                                                  June 30, 2008   Dec 31, 2007
                                                                  -------------   ------------
Cash and due from banks                                              $ 21,130      $  21,753
Interest bearing deposits with banks                                        0              0
Federal funds sold                                                        732         27,134
Investment Securities:
   U.S. Treasury                                                            0              0
   U.S. Government                                                    142,075        144,104
   State & political obligations                                       45,934         41,467
   All others                                                           4,443          4,346
Loans and leases (Net of reserve for loan losses of
   $5,763 and $5,921  respectively)                                   546,608        523,474
Bank premises and equipment-net                                        17,181         17,051
Accrued interest and other assets                                      21,594         20,638
Goodwill                                                                4,074          4,007
                                                                     --------      ---------
      TOTAL ASSETS                                                   $803,771      $ 803,974
                                                                     ========      =========
      Noninterest bearing                                            $ 59,243      $  75,670
      Interest bearing                                                555,187        558,923
   Federal funds purchased and securities
      sold under agreement to repurchase                               51,235         41,329
   Other borrowed money                                                43,628         31,816
   Accrued interest and other liabilities                               6,100          6,861
                                                                     --------      ---------
      Total Liabilities                                               715,393        714,599
   Common stock, no par value - authorized 6,500,000
      shares; issued 5,200,000 shares                                  12,677         12,677
   Treasury Stock - 346,750 shares 2008, 256,160 shares 2007           (7,249)        (5,366)
      Unearned Stock Awards 16,995 for 2008 and 17,240 for 2007          (386)          (391)
   Undivided profits                                                   83,474         81,575
   Accumulated other comprehensive income (expense)                      (138)           880
                                                                     --------      ---------
      Total Shareholders' Equity                                       88,378         89,375
                                                                     --------      ---------
LIABILITIES AND SHAREHOLDERS' EQUITY                                 $803,771      $ 803,974
                                                                     ========      =========

See Notes to Condensed Consolidated Unaudited Financial Statements.

Note: The December 31, 2007 Balance Sheet has been derived from the audited
financial statements of that date.


                        FARMERS & MERCHANTS BANCORP, INC.
                (in thousands of dollars, except per share data)

                                                               Three Months Ended               Six Months Ended
                                                         -----------------------------   -----------------------------
                                                         June 30, 2008   June 30, 2007   June 30, 2008   June 30, 2007
                                                         -------------   -------------   -------------   -------------
   Loans and leases                                       $    8,875       $    9,468      $   17,769     $   18,967
   Investment Securities:
      U.S. Treasury securities                                    --                4              --              9
      Securities of U.S. Government agencies                   1,710            1,394           3,359          2,718
      Obligations of states and political subdivisions           439              409             846            831
      Other                                                       58               65             112            128
   Federal funds                                                  52               26             259             77
   Deposits in banks                                              --                3              --             29
                                                          ----------       ----------      ----------     ----------
         Total Interest Income                                11,134           11,369          22,345         22,759
   Deposits                                                    4,003            4,626           8,496          9,022
   Borrowed funds                                                656              744           1,417          1,524
                                                          ----------       ----------      ----------     ----------
         Total Interest Expense                                4,659            5,370           9,913         10,546
                                                          ----------       ----------      ----------     ----------
      PROVISION FOR LOAN LOSSES                                6,475            5,999          12,432         12,213
PROVISION FOR LOAN LOSSES                                        180              154             449            135

                                                          ----------       ----------      ----------     ----------
      PROVISION FOR LOAN LOSSES                                6,295            5,845          11,983         12,078
   Service charges                                               859              795           1,679          1,556
   Other                                                         749              762           1,536          1,377
   Net securities gains (losses)                                  --               --              15             --
                                                          ----------       ----------      ----------     ----------
                                                               1,608            1,557           3,230          2,933
   Salaries and wages                                          2,086            2,062           4,116          4,151
   Pension and other employee benefits                           819              742           1,673          1,559
   Occupancy expense (net)                                       208              122             461            271
   Other operating expenses                                    1,968            1,707           3,992          3,368
                                                          ----------       ----------      ----------     ----------
                                                               5,081            4,633          10,242          9,349
                                                          ----------       ----------      ----------     ----------
INCOME BEFORE FEDERAL INCOME TAX                               2,822            2,769           4,971          5,662
FEDERAL INCOME TAXES                                             783              778           1,364          1,592
                                                          ----------       ----------      ----------     ----------
NET INCOME                                                     2,039            1,991           3,607          4,070
                                                          ==========       ==========      ==========     ==========

   Unrealized gains (losses) on securities                    (2,917)            (948)         (1,018)          (658)
                                                          ----------       ----------      ----------     ----------
COMPREHENSIVE INCOME (EXPENSE)                            $     (878)      $    1,043      $    2,589     $    3,412

NET INCOME PER SHARE                                      $     0.42       $     0.39      $     0.74     $     0.79
   Based upon average weighted shares outstanding of:      4,867,824        5,117,901       4,892,765      5,133,846
DIVIDENDS DECLARED                                        $     0.16       $     0.16      $     0.32     $     0.32

No disclosure of diluted earnings per share is required as shares are
antidiluted as of quarter end.

See Notes to Condensed Consolidated Unaudited Financial Statements.


                        FARMERS & MERCHANTS BANCORP, INC.
                            (in thousands of dollars)

                                                                     Six Months Ended
                                                             June 30, 2008   June 30, 2007
                                                             -------------   -------------
   Net income                                                  $  3,607        $  4,070
   Adjustments to Reconcile Net Income to Net
      Cash Provided by Operating Activities:
         Depreciation and amortization                              586             594
         Premium amortization                                       186             161
         Discount amortization                                      (54)            (96)
         Provision for loan losses                                  449             135
         Provision (Benefit) for deferred income taxes             (211)
         (Gain) Loss on sale of fixed assets                         15              (1)
         (Gain) Loss on sale of investment securities               (15)             --
         Changes in Operating Assets and Liabilities:
            Accrued interest receivable and other assets           (940)         (1,664)
            Accrued interest payable and other liabilities         (240)           (843)
                                                               --------        --------
      Net Cash Provided by Operating Activities                   3,383           2,356
   Capital expenditures                                            (734)           (988)
   Proceeds from sale of fixed assets                                 3              --
   Proceeds from maturities of investment securities:            46,173          33,684
   Proceeds from sale of investment securities:                      25              --
   Purchase of investment securities                            (50,391)        (26,373)
   Purchase of Bank Owned Life Insurance                             --          (3,000)
   Net (increase) decrease in loans and leases                  (23,583)            167
                                                               --------        --------
      Net Cash Provided (Used) by Investing Activities          (28,507)          3,490
   Net increase (decrease) in deposits                          (20,163)        (32,641)
   Net change in short-term borrowings                            9,906           9,705
   Increase in long-term borrowings                              12,000              --
   Payments on long-term borrowings                                (188)           (365)
   Purchase of Treasury stock                                    (1,878)         (1,302)
   Payment of Stock Awards                                           --              --
   Payments of dividends                                         (1,578)         (1,596)
                                                               --------        --------
      Net Cash Provided (Used) by Financing Activities           (1,901)        (26,199)
                                                               --------        --------
Net change in cash and cash equivalents                         (27,025)        (20,353)
Cash and cash equivalents - Beginning of year                    48,887          37,247
                                                               --------        --------
CASH AND CASH EQUIVALENTS - END OF THE YEAR                    $ 21,862        $ 16,894
                                                               ========        ========
  Cash and cash due from banks                                 $ 21,130        $ 15,309
  Interest bearing deposits                                          --             303
  Federal funds sold                                                732           1,282
                                                               --------        --------
                                                               $ 21,862        $ 16,894
                                                               ========        ========

See Notes to Condensed Consolidated Unaudited Financial Statements.


                        FARMERS & MERCHANTS BANCORP, INC.


       The accompanying unaudited condensed consolidated financial statements
       have been prepared in accordance with generally accepted accounting
       principles for interim financial information and with the instructions
       for Form 10Q and Rule 10-01 of Regulation S-X; accordingly, they do not
       include all of the information and footnotes required by generally
       accepted accounting principles for complete financial statements. In the
       opinion of management, all adjustments, consisting of normal recurring
       accruals, considered necessary for a fair presentation have been
       included. Operating results for the six months ended June 30, 2008 are
       not necessarily indicative of the results that are expected for the year
       ended December 31, 2008. For further information, refer to the
       consolidated financial statements and footnotes thereto included in the
       Company's annual report on Form 10-K for the year ended December 31,


       In September 2006, the FASB ratified the Emerging Issues Task Force's
       (EITF) Issue 06-4, Accounting for Deferred Compensation and
       Postretirement Benefit Aspects of Endorsement Split- Dollar Life
       Insurance Arrangements, which requires companies to recognize a liability
       and related compensation costs for endorsement split-dollar life
       insurance policies that provide a benefit to an employee extending to
       post retirement periods. The liability should be recognized based on the
       substantive agreement with the employee. This Issue was effective
       beginning January 1, 2008. The Issue was applied as a change in
       accounting principle through a cumulative-effect adjustment to retained
       earnings as of January 1, 2008 approximating $152,000.



       Farmers & Merchants Bancorp, Inc. was incorporated on February 25, 1985,
       under the laws of the State of Ohio. Farmers & Merchants Bancorp, Inc.,
       and its subsidiary The Farmers & Merchants State Bank are engaged in
       commercial banking. On December 31, 2007 the Bank closed on it's Knisely
       Bank, Indiana acquisition adding two more full service locations. During
       2007, the Company operated another subsidiary, Farmers and Merchants Life
       Insurance which offered life and disability insurance to the Bank's
       credit customers. The subsidiary was dissolved at the end of 2007. The
       executive offices of Farmers & Merchants Bancorp, Inc are located at
       307-11 North Defiance Street, Archbold, Ohio 43502.


       The Company's consolidated financial statements are prepared in
       accordance with accounting principles generally accepted in the United
       States of America, and the Company follows general practices within the
       industries in which it operates. At times the application of these
       principles requires Management to make assumptions estimates and
       judgments that affect the amounts reported in the financial statements.
       These assumptions, estimates and judgments are based on information
       available as of the date of the financial statements. As this information
       changes, the financial statements could reflect different assumptions,
       estimates and judgments. Certain policies inherently have a greater
       reliance on assumptions, estimates and judgments and as such have a
       greater possibility of producing results that could be materially
       different than originally reported. Examples of critical assumptions,
       estimates and judgments are when assets and liabilities are required to
       be recorded at fair value, when a decline in the value of an asset not
       required to be recorded at fair value warrants an impairment write-down
       or valuation reserve to be established, or when an asset or liability
       must be recorded contingent upon a future event.

       Based on the valuation techniques used and the sensitivity of financial
       statement amounts to assumptions, estimates, and judgments underlying
       those amounts, management has identified the determination of the
       Allowance for Loan and Lease Losses (ALLL), the valuation


       OF OPERATIONS (Continued)

       of its Mortgage Servicing Rights and the valuation of its post retirement
       benefit liability as the accounting areas that requires the most
       subjective or complex judgments, and as such have the highest possibility
       of being subject to revision as new information becomes available.

       The ALLL represents management's estimate of credit losses inherent in
       the Bank's loan portfolio at the report date. The estimate is composite
       of a variety of factors including past experience, collateral value and
       the general economy. ALLL includes a specific portion, a formula driven
       portion, and a general nonspecific portion.


       The following tables present information about the Company's assets and
       liabilities measured at fair value on a recurring basis at June 30, 2008,
       and the valuation techniques used by the Company to determine those fair

       In general, fair values determined by Level 1 inputs use quoted prices in
       active markets for identical assets or liabilities that the Company has
       the ability to access.

       Fair values determined by Level 2 inputs use other inputs that are
       observable, either directly or indirectly. These Level 2 inputs include
       quoted prices for similar assets and liabilities in active markets, and
       other inputs such as interest rates and yield curves that are observable
       at commonly quoted intervals.

       Level 3 inputs are unobservable inputs, including inputs that are
       available in situations where there is little, if any, market activity
       for the related asset or liability.

       In instances where inputs used to measure fair value fall into different
       levels in the above fair value hierarchy, fair value measurements in
       their entirety are categorized based on the lowest level input that is
       significant to the valuation. The Company's assessment of the
       significance of particular inputs to these fair value measurements
       requires judgment and considers factors specific to each asset or

       Disclosures concerning assets and liabilities measured at fair value are
       as follows:

       Assets and Liabilities Measured at Fair Value on a Recurring Basis at
       June 30, 2008

                                ($ in Thousands)

                                         Quoted Prices in Active      Significant         Significant
                                          Markets for Identical    Observable Inputs   Observable Inputs     Balance at
                                            Assets (Level 1)           (Level 2)            (Level 3)      June 30, 2008
                                         -----------------------   -----------------   -----------------   -------------
Assets - Securities Available for Sale          $142,075                $45,934               $0              $188,009
                                                ========                =======              ===              ========
Liabilities                                     $      0                $     0               $0              $      0
                                                ========                =======              ===              ========

       The Company did not have any assets or liabilities measured at fair value
       that were categorized as Level 3 during the period. All of the Company's
       available for sale securities, including any bonds issued by local
       municipalities, have CUSIP numbers making them marketable and comparable
       as Level 2.

       The Company also has assets that, under certain conditions, are subject
       to measurement at fair value on a non-recurring basis. At June 30, 2008,
       such assets consist primarily of impaired loans. The Company has
       established the fair values of these assets using Level 3 inputs,
       specifically discounted cash flow


       OF OPERATIONS (Continued)

       projections. During the quarter ended June 30, 2008, the impairment
       charges recorded to the income statement for impaired loans were not

       Impaired loans accounted for under FAS 114 categorized as Level 3 assets
       consist of non-homogeneous loans that are considered impaired . The
       Company estimates the fair value of the loans based on the present value
       of expected future cash flows using management's best estimate of key
       assumptions. These assumptions include future payment ability, timing of
       payment streams, and estimated realizable values of available collateral
       (typically based on outside appraisals).

       Other assets, including bank owned life insurance, are also subject to
       periodic impairment assessments under other accounting principles
       generally accepted in the United States of America. These assets are not
       considered financial instruments. Effective February 12, 2008, the FASB
       issued a staff position, FSP FAS 157-2, which delayed the applicability
       of FAS 157 to non-financial instruments. Accordingly, these assets have
       been omitted from the above disclosures.


       In comparing the balance sheet of June 30, 2008 to that of December 31,
       2007, the largest change is the switch in the Federal Funds position. At
       December 31, just over $27 million was being sold and in June 2008, $9.7
       million was being purchased. The almost $40 million change in liquidity
       funded $23.5 million in loan growth and replaced over $20 million of
       deposits. The investment portfolio increased almost $2.5 million along
       with other borrowed money of almost $10 million. The December 31, 2007
       cash balance was unusually high due to an acquisition that closed on the
       last business day of the year and was a cash purchase. The proceeds of
       the purchase, around $10 million, remained in the selling holding
       company's account maintained at the Bank. Proceeds were dispersed to
       shareholders in 2008 which is partially responsible for the decrease in
       non-interest bearing deposit balances in the first six months of 2008.
       The other factor in lowering of the non-interest bearing deposit balances
       is the Bank offering a new high interest bearing transaction account. The
       balance in the new product was over $14 million as of June 30, 2008 with
       funds being moved from free non-interest checking balances into the new
       interest bearing checking balances. It has also attracted new money and
       some funds have also moved from the certificate of deposit portfolio. The
       expense of the high interest rate is offset by an increase in the
       non-interest fee activity and decrease in non-interest expense. The new
       product has been well received by existing customers and has attracted
       new customers as well.

       Liquidity and capital remain strong with capital decreasing due to the
       market value change of securities and the continued repurchasing of
       treasury stock. The Company repurchased 228,000 shares during 2007 and
       continued with an additional 44,900 shares during the 1st quarter 2008
       and 45,445 shares during the 2nd quarter. In terms of dollars spent, 2007
       purchases cost just over $4.7 million and 2008 purchases cost over $1.877
       million. The Company has authorization to purchase up to 250 thousand
       shares during 2008.

       The Company continues to be well-capitalized as the capital ratios below

Primary Ratio                       11.20%
Tier I Leverage Ratio               10.52%
Risk Based Capital Tier 1           13.76%
Total Risk Based Capital            14.74%
Stockholders' Equity/Total Assets   11.00%

       Undivided profits increased with the net income from the Bank. The Bank's
       capital was also impacted by the establishment of a post retirement
       benefit liability as required by EITF 06-4 of its Bank Owned Life
       Insurance (BOLI). The funding of just under $152 thousand was provided by
       decreasing retained earnings. The transaction was completed in the first
       quarter and the liability was established using the present value
       calculation of a third party administrator.

       As stated previously, loans increased $23.5 million during the first half
       2008. Past due loans over 30 days improved to end June 30, 2008 at 2.41%
       compared to December 31, 2007 past due percentage of 2.88%. While an
       improvement over December's numbers, the percentage is higher than most
       of 2007. Driving the percentage is the commercial and agricultural
       portfolios. Those same loans have increased the non-accrual balances of
       the Bank. A loan is placed in non-accrual automatically once it has
       reached 90 days past due. The balance in non-accruals increased over $5
       million during the first quarter and an additional $1.2 million during
       the second quarter. The increases were based on just a few relationships
       experiencing difficulty. Residential mortgage delinquency was under two
       percent and consumer loan is less than one quarter of a percent. A
       discussion of the additional impact to profitability caused by the non
       accruals will follow in the results of operations.

       Unlike many of the industry headlines, the Bank has not experienced
       losses due to the subprime mortgage market. The Bank did not participate
       in subprime lending and the local economies have dealt more with
       decreased working hours and bonuses. Overall the credit quality remains
       strong and the issues manageable.


       OF OPERATIONS (Continued)


       Due to the impact of the first quarter activity on the year-to-date
       numbers, some of the discussion to follow will reference the change
       between first and second quarter 2008 as compared to 2007.

       Interest income and yield on the loan portfolio was down significantly in
       the first quarter 2008 compared to first quarter 2007. Reversal of
       interest income due to the loans whose status went to nonaccrual totaled
       over $370 thousand. Any interest that has been accrued but not yet
       collected is reversed out of interest income when the loan goes into
       nonaccrual. At a minimum, loans with monthly payments may have four
       months of accrued interest reversed. Those whose payments are less
       frequent may have even more months reversed. This reversal does not
       exclude collection of the interest but rather it may only be taken into
       income when collected on a cash basis once a loan is in nonaccrual
       status. As mentioned earlier, these loans were mainly in the commercial
       and agricultural portfolios. During the second quarter, an additional $88
       thousand of interest income was reversed due to the increase in non
       accrual balances. This was offset by smaller interest collections but
       overall, the high non accrual balances remain a barrier to higher

       The Federal Fund rate cuts during 2007 and 2008 also impacted the yield
       of the portfolio. Lines of credit, adjustable rate mortgages subject to
       repricing, home equities and new loans all priced considerably lower in
       first half 2008 versus 2007. This was the other large factor in the lower
       interest income.

       While the yield on the Federal Funds was impacted by the cuts, the sheer
       volume of Federal Funds compared to first quarter 2007 out weighed the
       yield. Interest earned on Federal Funds was $182 thousand higher in 2008.
       The same rationale applies to the interest income from the investment
       portfolio which was $640 thousand higher in the first half 2008 than the
       first half 2007.

       Interest expense increased $119 thousand in 2008 when comparing the first
       quarters. The cost of funds or yield, however, decreased. During the
       second quarter, as higher rate certificate of deposits matured along with
       the run off of deposits, the interest expense was significantly lower
       compared to same quarter last year. A large percentage of the certificate
       of deposit portfolio will continue to reprice during the third quarter of
       2008 sustaining the improvement in the net interest margin. Interest on
       borrowed funds was also lower as compared for the quarter and first half
       2008 to 2007. As maturities occurred in 2007, the replacement and
       addition of borrowings were at significantly lower interest costs.

       Overall net interest income reversed the position of first quarter
       performance where 2008 was running below 2007. Second quarter 2008 was
       $437 thousand higher as compared to 2007. Year to date June 30th, net
       interest income was $141 thousand higher in 2008 as compared to 2007. Net
       interest income should continue to increase as the Bank continues to work
       to reduce the amount of loans in nonaccrual, maintains a smaller cash
       position, and lastly continues the decrease in the cost of funds as a
       result of the repricing certificates of deposit.

       Provision for loan loss was $314 thousand higher in 2008 than 2007. As
       mentioned earlier, the increase in the non accrual loans along with loan
       growth, warranted a higher provision to the loan loss reserve. The net
       charge-off position was also slightly higher in 2008 by around $125
       thousand compared to 2007.

       Non interest income increased by $247 thousand for first quarter 2008
       compared to 2007. The acquisition added core deposits upon which more
       revenue was generated in service charges and also in other fees
       associated with the accounts. Four Automated Teller Machines (ATM's) were
       added from the acquisition. One remote ATM has heavier foreign volume, on
       which fees are charged, than typical of the Bank's other ATMs. The new
       checking product is expected to increase non interest income through
       increased debit card activity the second half of the year. As the
       accounts have switched, the debit card activity has doubled for those
       customers. The convenience to the customers and increased revenue to the
       Bank will continue to be a positive for all involved. Overall, non
       interest income for the three months ended June 30, 2008 was $51 thousand
       higher than the same period 2007, bringing the year to date total $297
       higher than 2007.

       Due to state regulatory restrictions, stock was sold during the first
       quarter to maintain a relationship with only one banker's bank which
       resulted in the $15 thousand gain on investments.


       OF OPERATIONS (Continued)

       Non interest expense was $404 thousand higher for first quarter 2008 as
       compared to same quarter 2007. The second quarter was $409 thousand
       higher comparing 2008 to 2007. Even though the number of full time
       equivalent employees increased to 259 for the first quarter, it decreased
       to 256 the second quarter. The number of employees remains higher in 2008
       than 2007, while the salary and wage expense has decreased $35 thousand.
       Underlying the decrease is a lower accrual for incentive pay for 2008 as
       compared to 2007. The lower incentive accrual is a direct correlation to
       the lower Return on Assets for the year as compared to 2007; ROA being a
       primary determinant of incentive compensation. Base salary expense has
       increased due to the higher number of employees. The Bank has three new
       locations compared to same time last year and one office was relocated.
       The relocation occurred at the end of June 2008. This is also reflected
       in the increased expense in pension and other employee benefits. The Bank
       expects medical benefit costs to increase 11% during 2008 over 2007. At
       this point, the increase in pension and other employee benefits is 7.3%.

       Occupancy expense is higher with the addition of three offices in the
       fourth quarter of 2007. The Bank's Perrysburg office opened in November
       and the acquisition which added two offices was completed on December 31,
       2007. The acquired locations are expected to be accretive to earnings in
       2008 and the Bank projects the Perrysburg office to be profitable on a
       monthly basis within 18 to 24 months. An additional location is to be
       added in August and additional expense was occurred in preparation. The
       new location will operate from a leased property.

       Adding the offices and specifically the addition of accounts caused the
       increase in the other operating expenses of $546 thousand for first half
       of 2008 compared to 2007. The second quarter comparison of $222 thousand
       more expense than same quarter last year was lower than the $324 thousand
       in comparing first quarter 2008 to 2007. The Bank's data processing
       expense is based mainly on the number of accounts under management. Each
       application, such as loan, checking, certificate of deposit, are costed
       individually along with the household account database. Additional
       expense was also carried the first part of 2008 until the software
       conversion of the Knisely Bank was completed in January. Most of the
       outstanding contracts of the Knisely Bank have been reviewed and either
       modified or terminated. Only minor bills were presented for payment in
       the second quarter. While the expense will remain higher, the on going
       expense will continue to decrease as one time expenses to establish the
       offices and carry back room support have been incurred.

       Overall, net income was down just $463 thousand in comparing 2008 to 2007
       first half performance. The performance of the three months ended June 30
       were actually better than the same three months last year. The Company
       expects for the performance to continue to improve the remaining quarters
       of 2008. Additional new products and the focus on returning asset quality
       to a higher level will accomplish this. The Company remains positioned
       for continued improvement in the net interest margin in the next quarter
       due to decreasing cost of funds. The Company continues to focus on
       positioning the balance sheet for a neutral rate position going forward.
       The Company does remain, however, a reflection of the local economy in
       which it operates. To the degree that the local economies continue to
       deal with slow downs, the Company will be hampered to achieve its growth
       goals. The addition of a new market in the second half of the year along
       with the new additions in 2007 will aid in the growth effort.


       Statements contained in this portion of the Company's report may be
       forward-looking statements, as that term is defined in the Private
       Securities Litigation Reform Act of 1995. Forward-looking statements may
       be identified by the use of words such as "intend," "believe," "expect,"
       "anticipate," "should," "planned," "estimated," and "potential." Such
       forward-looking statements are based on current expectations, but may
       differ materially from those currently anticipated due to a number of
       factors, which include, but are not limited to, factors discussed in
       documents filed by the Company with the Securities and Exchange
       Commission from time to time. Other factors which could have a material
       adverse effect on the operations of the company and its subsidiaries
       which include, but are not limited to, changes in interest rates, general
       economic conditions, legislative and regulatory changes, monetary and
       fiscal policies of the U.S. Government, including policies of the U.S.
       Treasury and the Federal Reserve Board, the quality and composition of
       the loan or investment portfolios, demand for loan products, deposit
       flows, competition, demand for financial services in the Bank's market
       area, changes in relevant accounting principles and guidelines and other
       factors over which management has no control. The forward-looking
       statements are made as of the date of this report, and the Company
       assumes no obligation to update the forward-looking statements or to
       update the reasons why actual results differ from those projected in the
       forward-looking statements.



       Market risk is the exposure to loss resulting from changes in interest
       rates and equity prices. The primary market risk to which the Company is
       subject is interest rate risk. The majority of the Company's interest
       rate risk arises from the instruments, positions and transactions entered
       into for purposes, other than trading, such as lending, investing and
       securing sources of funds. Interest rate risk occurs when interest
       bearing assets and liabilities reprice at different times as market
       interest rates change. For example, if fixed rate assets are funded with
       variable rate debt, the spread between asset and liability rates will
       decline or turn negative if rates increase.

       Interest rate risk is managed within an overall asset/liability framework
       for the Company. The principal objectives of asset/liability management
       are to manage sensitivity of net interest spreads and net income to
       potential changes in interest rates. Funding positions are kept within
       predetermined limits designed to ensure that risk-taking is not excessive
       and that liquidity is properly managed. The Company employs a sensitivity
       analysis in the form of a net interest rate shock as shown in the table

Interest Rate Shock on Net Interest Margin   Interest Rate Shock on Net Interest Income
------------------------------------------   ------------------------------------------
  Net Interest    % Change to      Rate          Rate       Cumulative    % Change to
 Margin (Ratio)    Flat Rate    Direction     Changes by   Total ($000)    Flat Rate
 --------------   -----------   ---------     ----------   ------------   -----------
      3.17%         -16.498%      Rising         3.000%       12,752       -16.893%
      3.39%         -10.931%      Rising         2.000%       13,624       -11.210%
      3.59%          -5.432%      Rising         1.000%       14,488        -5.579%
      3.80%           0.000%       Flat          0.000%       15,344         0.000%
      4.00%           5.191%     Falling        -1.000%       16,140         5.186%
      4.11%           8.051%     Falling        -2.000%       16,574         8.013%
      4.13%           8.779%     Falling        -3.000%       16,720         8.965%

       The net interest margin represents the forecasted twelve month margin. It
       also shows what effect rate changes will have on both the margin and the
       net interest income. The shock report has consistently shown an
       improvement in a falling rate environment. The goal of the Company is to
       lengthen some of the liabilities or sources of funds to decrease the
       exposure to a raising rate environment. The Bank has offered higher rates
       on certificates of deposits for longer periods so far during 2008 than it
       did during the same period in 2007. Of course, customer desires also
       drive the ability to capture longer term deposits. Currently, the
       customer looks for terms twelve months and under while the Bank would
       prefer 24 months and longer. It is often a meeting in the middle that
       satisfies both.

       The Bank continues to remain focused on gaining more relationships per
       customer as a way to help control the cost of funds also. Promotions
       continue to focus on special incentives or rewards being based on a
       multiple deposit account relationship with each customer. A new program
       also promotes a high rate interest bearing checking account with the
       increased interest expense offset by fees and savings in operating
       efficiency. The promotion has been extremely successful since its release
       in early March.



       As of June 30, 2008, an evaluation was performed under the supervision
       and with the participation of the Company's management including the CEO
       and CFO, of the effectiveness of the design and operation of the
       Company's disclosure controls and procedures. Based on that evaluation,
       the Company's management, including the CEO and CFO, concluded that the
       Company's disclosure controls and procedures were effective as of June
       30, 2008. There have been no significant changes in the Company's
       internal controls that occurred during the quarter ended June 30, 2008.





       There have been no material changes in the risk factors disclosed by
       Registrant in its Report on Form 10-K for the fiscal year ended December
       31, 2007.


                                                        (c) Total Number of Shares     (d) Maximum Number of Shares
              (a) Total Number    (b) Average Price   Purchased as Part of Publicly   that may yet be purchased under
Period      of Shares Purchased     Paid per Share      Announced Plan or Programs         the Plans or Programs
------      -------------------   -----------------   -----------------------------   -------------------------------
to                                                                                                205,100

to                 25,741               $21.53                  25,741                            179,359

to                 19,704               $22.80                  19,704                            159,655
                   ------               ------                  ------                            -------
Total              45,445               $22.08                  45,445(1)                         159,655
                   ======               ======                  ======                            =======

(1)  The Company purchased these shares in the market pursuant to a stock
     repurchase program publicly announced on November 16, 2007. On that date,
     the Board of Directors authorized the repurchase of 250,000 common shares
     between January 1, 2008 and December 31, 2008.




       The Annual Meeting of Shareholders of Farmers & Merchants Bancorp, Inc.
       was held on April 17, 2008. The following directors were elected to a new
       term of office:

Dexter L. Benecke
Joe E. Crossgrove
Steven A. Everhart
Robert G. Frey
Jack C. Johnson
Dean E. Miller
Steven J. Planson
Anthony J. Rupp
David P. Rupp Jr.
James C. Saneholtz
Kevin J. Sauder
Merle J. Short
Paul S. Siebenmorgen
Steven J. Wyse



       1. A proposal to elect fourteen (14) directors of the Corporation The
       results of the voting on the proxy items are as follows:

                       Votes Cast     Votes
                           For      Withhold
                       ----------   --------
Dexter L. Benecke       3,719,861    13,174
Joe E. Crossgrove       3,718,151    14,884
Steven A. Everhart      3,709,671    23,364
Robert G. Frey          3,703,510    29,524
Jack C. Johnson         3,699,749    33,286
Dean E. Miller          3,719,711    13,324
Steven J. Planson       3,718,461    14,574
Anthony J. Rupp         3,709,391    23,644
David P. Rupp Jr.       3,700,181    32,854
James C. Saneholtz      3,708,719    24,316
Kevin J. Sauder         3,689,321    43,714
Merle J. Short          3,719,811    13,224
Paul S. Siebenmorgen    3,704,497    28,538
Steven J. Wyse          3,705,369    27,666



3.1  Amended Articles of Incorporation of the Registrant (incorporated by
     reference to Registrant's Quarterly Report on Form 10-Q filed with the
     Commission on August 1, 2006)

3.2  Code of Regulations of the Registrant (incorporated by reference to
     Registrant's Quarterly Report on Form 10-Q filed with the Commission on May
     10, 2004)

31.1 Rule 13-a-14(a) Certification -CEO

31.2 Rule 13-a-14(a) Certification -CFO

32.1 Section 1350 Certification - CEO

32.2 Section 1350 Certification - CFO



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.

                                        Farmers & Merchants Bancorp, Inc.,

Date: July 30, 2008                     By: /s/ Paul S. Siebenmorgen
                                            Paul S. Siebenmorgen
                                            President and CEO

Date: July 30, 2008                     By: /s/ Barbara J. Britenriker
                                            Barbara J. Britenriker
                                            Exec. Vice-President and CFO