How profitable a bank is affects its long-term survivability. Earnings may be retained by the bank, expanding its capital buffer, or be used to deal with problematic loans, potentially making the bank better able to withstand economic trouble. Obviously, banks that are losing money have less ability to do those things.
Farmers & Merchants Bank scored 10 out of a possible 30 on Bankrate's test of earnings, failing to reach the national average of 16.52.
One key way to measure a bank's earnings is return on equity, or net income (essentially profit) divided by total equity. Farmers & Merchants Bank's most recent annualized quarterly return on equity was 4.99 percent, below the national average of 9.28 percent.
For the twelve months ended June 30, 2017, the bank reported net income of $555,000 on total equity of $22.8 million. The bank experienced an annualized return on average assets, or ROA, of 0.55 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.14 percent.