How profitable a bank is affects its long-term survivability. Earnings may be retained by the bank, giving a boost to its capital buffer, or be used to address problematic loans, potentially making the bank better able to withstand financial trouble. Obviously, banks that are losing money are less able to do those things.
On Bankrate's earnings test, Farmers and Merchants Bank scored 16 out of a possible 30, beating out the national average of 15.12.
One key measure of a bank's earnings is return on equity, calculated by dividing net income (profit, essentially) by the total amount of equity. Farmers and Merchants Bank's most recent annualized quarterly return on equity was 7.58 percent, below the national average of 8.10 percent.
For the twelve months ended December 31, 2017, the bank recorded net income of $5.0 million on total equity of $69.6 million. The bank had an annualized return on average assets, or ROA, of 0.84 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.00 percent.