How profitable a bank is affects its long-term survivability. Earnings can be retained by the bank, expanding its capital cushion, or be used to address problematic loans, potentially making the bank more resilient in times of trouble. Obviously, banks that are losing money are less able to do those things.
On Bankrate's earnings test, Farmers and Merchants Bank scored 14 out of a possible 30, less than the national average of 15.12.
Return on equity, calculated by dividing net income (essentially, profit) by total equity, is one widely used measure of a bank's earnings. The most recent annualized quarterly return on equity for Farmers and Merchants Bank was 6.72 percent, below the national average of 8.10 percent.
The bank recorded net income of $2.7 million on total equity of $41.2 million for the twelve months ended December 31, 2017. The bank had an annualized return on average assets, or ROA, of 0.68 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.00 percent.