How profitable a bank is affects its long-term survivability. Earnings may be retained by the bank, boosting its capital buffer, or be used to address problematic loans, likely making the bank more resilient in tough times. However, banks that are losing money are less able to do those things.
Farmers and Merchants Bank did below-average on Bankrate's test of earnings, achieving a score of 0 out of a possible 30.
Return on equity, calculated by dividing net income (essentially, profit) by the total amount of equity, is one important way to measure a bank's earnings. Farmers and Merchants Bank's most recent annualized quarterly return on equity was -0.22 percent, below the national average of 8.10 percent.
The bank recorded net income of $-17,000 on total equity of $7.8 million for the twelve months ended December 31, 2017. The bank had an annualized return on average assets, or ROA, of -0.02 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.00 percent.