A bank's earnings performance affects its long-term survivability. A bank can retain its earnings, expanding its capital buffer, or put them to work addressing problematic loans, likely making the bank better prepared to withstand financial shocks. Losses, on the other hand, take away from a bank's ability to do those things.
On Bankrate's test of earnings, Farmers and Merchants Bank scored 22 out of a possible 30, better than the national average of 15.12.
One key measure of a bank's earnings is return on equity, calculated by dividing net income (profit, basically) by the total amount of equity. The most recent annualized quarterly return on equity for Farmers and Merchants Bank was 14.48 percent, above the national average of 8.10 percent.
The bank recorded net income of $1.7 million on total equity of $12.8 million for the twelve months ended December 31, 2017. The bank experienced an annualized return on average assets, or ROA, of 1.68 percent, above the 1 percent deemed satisfactory in accordance with industry standards, and above the average for U.S. banks of 1.00 percent.