How profitable a bank is 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 deal with 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.
On Bankrate's earnings test, Farmers and Merchants Bank of Ashland scored 10 out of a possible 30, coming in below the national average of 15.12.
Return on equity, calculated by dividing net income (profit, basically) by total equity, is one important way to measure a bank's earnings. Farmers and Merchants Bank of Ashland's most recent annualized quarterly return on equity was 4.97 percent, below the national average of 8.10 percent.
The bank recorded net income of $407,000 on total equity of $8.2 million for the twelve months ended December 31, 2017. 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 1.00 percent.