How profitable a bank is has an effect on its long-term survivability. Earnings may be retained by the bank, increasing its capital buffer, or be used to deal with problematic loans, potentially making the bank better prepared to withstand economic shocks. Obviously, banks that are losing money have less ability to do those things.
Farmers and Merchants State Bank of Appleton beat the national average on Bankrate's earnings test, achieving a score of 20 out of a possible 30.
One important measure of a bank's earnings is return on equity, calculated by dividing net income (profit, basically) by the total amount of equity. Farmers and Merchants State Bank of Appleton's most recent annualized quarterly return on equity was 11.54 percent, above the national average of 8.10 percent.
The bank recorded net income of $726,000 on total equity of $6.4 million for the twelve months ended December 31, 2017. The bank had an annualized return on average assets, or ROA, of 1.58 percent, above the 1 percent deemed satisfactory in accordance with industry standards, and above the average for U.S. banks of 1.00 percent.