A bank's ability to earn money has an effect on its safety and soundness. Earnings may be retained by the bank, giving a boost to its capital buffer, or be used to address problematic loans, likely making the bank more resilient in tough times. Losses, on the other hand, reduce a bank's ability to do those things.
Farmers & Merchants Bank scored 20 out of a possible 30 on Bankrate's test of earnings, better than the national average of 16.52.
One key measure of a bank's earnings is return on equity, or net income (essentially profit) divided by the total amount of equity. The most recent annualized quarterly return on equity for Farmers & Merchants Bank was 10.81 percent, above the national average of 9.28 percent.
For the twelve months ended June 30, 2017, the bank earned net income of $722,000 on total equity of $13.8 million. The bank experienced an annualized return on average assets, or ROA, of 1.07 percent, above the 1 percent deemed satisfactory in accordance with industry standards, but below the average for U.S. banks of 1.14 percent.