A bank's earnings performance affects its long-term survivability. A bank can retain its earnings, expanding its capital cushion, or put them to work addressing problematic loans, potentially making the bank better prepared to withstand financial trouble. Conversely, losses lessen a bank's ability to do those things.
On Bankrate's earnings test, Farmers and Merchants Bank of Mound City, Kansas scored 24 out of a possible 30, beating out the national average of 15.12.
One key way to measure a bank's earnings is return on equity, calculated by dividing net income (essentially profit) by the total amount of equity. The most recent annualized quarterly return on equity for Farmers and Merchants Bank of Mound City, Kansas was 15.86 percent, above the national average of 8.10 percent.
The bank recorded net income of $437,000 on total equity of $2.8 million for the twelve months ended December 31, 2017. The bank experienced an annualized return on average assets, or ROA, of 1.10 percent, above the 1 percent deemed satisfactory in accordance with industry standards, and above the average for U.S. banks of 1.00 percent.