How profitable a bank is has an effect on its long-term survivability. Earnings can 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 times of trouble. Banks that are losing money, however, have less ability to do those things.
Farmers and Merchants Bank scored 10 out of a possible 30 on Bankrate's earnings test, failing to reach the national average of 15.12.
Return on equity, calculated by dividing net income (essentially, profit) by the total amount of equity, is one key measure of a bank's earnings. The most recent annualized quarterly return on equity for Farmers and Merchants Bank was 4.21 percent, below the national average of 8.10 percent.
For the twelve months ended December 31, 2017, the bank reported net income of $670,000 on total equity of $16.0 million. The bank had an annualized return on average assets, or ROA, of 0.58 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.00 percent.